Why Do Newlyweds Believe Filing Separate Is Better?

[dyne]

Over the 28 years that I have been preparing tax returns I have NEVER found it best
for a newly married couple to file separately. But they are always convinced that they
should file separately. Why? Surely there could be the rare case where the wife had
more income and the husband had less income and was entitled to an auto expense
deduction or have another unusual situation causing filing separate to be best.
But for the last few years even when the husband had an auto expense deduction in
my case filing a Joint return turned out to be best.

[Koss]

MFJ vs. MFS

I've met many newlywed couples who think that "filing separately" means they will each use the filing status single.

I guess they think they have a choice because they weren't married the entire year...

Of course, some of these folks are so naive that they also think that the status and number of exemptions they put on their Form W-4 somehow determines what they can do when they file their tax return.

BMK

[Gary2]

Here's my idle speculation:

People dislike change. They're used to filing separately, why should they change? The days when one spouse manages all of the family finances, starting the day after the honeymoon, are over. So are the days when the wife's savings account was kept in the cookie jar. Lucy no longer has to turn to Ricky for an allowance.

Instead, each spouse has their own credit and debit cards. How do they manage to avoid being overdrawn or exceeding their limit if they have joint accounts? I don't think that's part of pre-marital counseling. Likewise, they may have 401k or other retirement accounts that are necessarily separate. With many employers, they're even better off having separate health plans until the first kid arrives. So there are many new incentives to managing separate finances. That's a good thing - but doesn't obviate the benefit of having joint finances as well.

For years, we've been hearing about the "marriage penalty." Without an understanding of how that works, one can easily jump to the erroneous conclusion that filing separately avoids the alleged penalty. ("Alleged" only because it's been tremendously reduced since 2003.)

Opposites attract. One spouse has all the paperwork ready Feb. 1 or sooner. The other spouse can't get organized till after March Madness. The only way for the first one to get it out of the way is to file separately.

And perhaps the simplest explanation: They can't arrange to come into the office at the same time, and don't want to pay a baby sitter just so they can do their taxes together.

[dtlee]

I am not sure there is any real answer to your question.

Here is how I explain it to myself. I doubt it is the whole story, but it is how it makes sense to me.

When I started preparing taxes, newlyweds were told by their parents that they would save a lot of money once they can file jointly. The parents of those newlyweds were frequently single-earning families. Back when the parents got married, a single earner joint return paid a lot less than a single individual (due to the additional exemption and the additional standard deduction). They passed on the experience but omitted key details.

Thus, these dual-income newlyweds would come in expecting to see a ton of money coming back and (at that time) they would owe more tax jointly than they would have paid when single. Tax preparers had to explain the "marriage" penalty. They lived through the years with Schedule W. They learned that they saved nothing by filing jointly.

The rules have changed, but just like their parents, the dual-income newlyweds of years ago have forgotten the details. They know that when they filed "separately" (in other words as "single") they got back more money than when they got married due to the marriage penalty. So now, they tell their kids to ask about filing separately because filing jointly cost them so much money; this despite the fact that the rules have changed so much that many taxpayers would have comparable liabilities either jointly or separately.

[Koss]

Marriage Penalty

I was thinking the same thing, but I couldn't figure out how to articulate it.

The marriage penalty has become part of our collective memory.



BMK

[DaveO]

It’s a phenomenon on the order of an urban legend. I deal with this two even spending 20 minutes on the phone with a client who is getting married next month explaining that we would determine his optimum filing status in 2013 for the 2012 return and no, don’t bother reading me the number off the wife’s W-2 I’m not doing to do an analysis over the phone.

Another factor is the distortion created by the EITC for single parents. I’ve had the newlywed wife storm out of the office when they see the refund is a few hundred dollars or worse a balance due when filing for the first time with her self employed husband instead of the thousands she is used to.

[Y2KEA]

Newlyweds want to do this because the butcher of their hairdresser said to do it.

Reminds of the client who told me he wanted his status to be "Married filing single".

[JohnH]

Bingo!
Y2KEA wins the prize for best and most logical answer.

[Burke]

All of the above substantiates my recommendation for simplification of the tax code by eliminating all filing statuses except one, but allowing married couples to file on one return if they so desire, whichever works out best for them. VA did this for years with their tax return (two pages) so it's quite doable. Children and deductions can be applied to either income as they see fit.

[veritas]

Pretty sure it's the

same reason many newlyweds want to keep their own surname.... Equality

[BP.]

same reason many newlyweds want to keep their own surname.... Equality

And on their tax return, they balk at being "spouse" (i.e. second signature.)

[MRPLOW]

Because in some States it does pay to file MFS.

Here in Ohio about 10% of my married couples save by filing seperate. And that's only couples that save at least $200, if i lowered that number to just saving anything, it would likely be about 25%.

I just had a couple in yesterday that saved close to $1000 by filing seperate.

[MilTaxEA]

Because in some States it does pay to file MFS.

Here in Ohio about 10% of my married couples save by filing seperate. And that's only couples that save at least $200, if i lowered that number to just saving anything, it would likely be about 25%.

I just had a couple in yesterday that saved close to $1000 by filing seperate.

Out of curiosidy, what makes it such a difference in Ohio?

[taxea]

Newlyweds want to do this because the butcher of their hairdresser said to do it.

Reminds of the client who told me he wanted his status to be "Married filing single".

I call them the "they" people. You know "they told me". My response to the TP is please ask they (them) to provide the source of their information. I need to research it to see whether it applies to your situation". Or "Is they (he/she/them, etc) a qualified tax preparer?"

[Nashville]

Resentment

I have had couples almost INSIST on filing separately because they are really hacked off at each other about something. Often, that "something" involves taxation itself. I can still hear comments like:

"You didn't take enough out of your check..."
"I TOLD you to keep up with that and you didn't do it..."
"I NEVER had to pay until I married YOU..."
"I let you have the refund last year and you blew the money, THIS year I'm filing separate"

As I sit there, I can unmistakably feel the heavy atmosphere, as the couple glares and glowers at each other.

Invariably what happens is they change their tune when they realize MFS is going to cost them hundreds, maybe thousands of dollars.