Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Joint Return

What it is:

A joint return is a tax return filed by two people based on their marital status at the end of the year or at the time of death of either one of the individuals.

How it works (Example):

There are generally two ways for a married couple to file a federal tax return. Married Filing Jointly (MFJ) or Married Filing Separately (MFS). Head of Household and Single Filing Status are also available under certain circumstances.

A joint return means that the couple has chosen to file their return as Married Filing Jointly. If the couple files together, the couple lists all of their income, deductions, credits, and expenses on one 1040 form. When filing together, both members of the couple are held individually and collectively responsible for this tax return and its consequences.

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Why it Matters:

If both husband and wife agree to file jointly, they are responsible for any penalties incurred from that tax return unless one of the parties can claim innocent spouse relief or similar. If one of the spouses justifiably claims innocent spouse relief they can be relieved of paying tax, interest, and associated penalties if the other spouse (or former spouse) improperly reported items or omitted items on the joint tax return.
 
The overall tax liability could be larger with either return (MFJ or MFS) depending on the particular circumstances which is why many people tend to calculate their return(s) under both scenarios and then determine the best option.

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