If a married couple changes from a joint tax return to two returns, does this affect the total amount on tax?

Question

The couple lives in Michigan. The husband is contemplating moving to Illinois to accept a job that would require him to live in Chicago. His wife would continue to live in Michigan. Therefore, they would have to file separate individual tax returns instead of a joint return. All other things being the same, would they have to pay more taxes in total because of having to file separate returns?

Answer 1

Well, the federal return wouldn't need to be a separate filing from his wife's just because they live separately. They might have some state issues because Michigan's going to want to tax his Illinois earning by treating him as a resident (his family still lives there, his big home is there and his condo is in Illinois (presumably)), and Illinois will definitely tax his money earned in Illinois whether he lives there or not, and will want to tax his worldwide income (including for example, interest and dividends earned from a Michigan bank) if he lives there. If the tax rates (counting city taxes if applicable) in Illinois and Michigan are the same or close, he won't pay more tax, because all states allow a credit against their tax for taxes paid to another state.

He really should talk to a tax adviser directly if he wants to make sure he gets this right. There can be nuances here that won't be addressed adequately in this forum.

Answer 2

To file jointly you need not live together provided you are legally married.

If your individual taxable incomes are approximately the same your total income tax will probably be just about the same filing either jointly or separately. However, if there is a fairly large difference in your individual incomes it generally results in lower total taxes if you file jointly.

To pay the least income tax you would want to prepare your tax returns both ways and compare the results.

State income taxes are a different matter. You will have to file tax returns in each state. Again, you file joint state returns if you are filing federal joint returns. It does not matter who earns the income.

However, this can be complicated as adjoining states sometimes have offsetting charges and credits for income earned in another state. You should consult a tax advisor in Michigan and/or Illinois about this. You might find that there would be a big enough advantage in filing separate state returns that you would also want to file separate federal returns.

Answer 3

They can still file a joint return. Filing separately almost always results in paying MORE tax. The only way separate returns help is if one person has, for example, a lot of medical expense--in which case only one income is subject to the 7½ % reduction to the medical expense. There are a few other situations in which separate returns would help, but generally it does not help to file separately. The only way to tell for sure is to calculate the tax both ways and see if the two separate returns result in more or less tax.

Answer 4

No you would not have to file separate tax returns, and no you will not have to pay more unless the tax rate for the state of Illinois is higher than Michigan. You will still file one return, you may file married filing sep, but it won't help or hurt you in any way.

Answer 5

Just because you're not living together doesn't mean you can't file a joint federal return - assuming you're still married, you can still file jointly.

Filing as married filing separately instead of joint generally costs you more.

State filings would depend on state law.

Answer 6

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Answer 7

I believe that is true... You would probably have to pay a little more because you are filing seperate.. Try claiming kids or donating to knock down taxes..good luck..!