Married couples have the right to file their federal and state taxes jointly or separately. Most couples save money by filing jointly, but in some circumstances it might make better financial sense to file separately. Filing separately is more complicated in community property states like Texas, where the government considers income and property to belong equally to both marriage partners, as you have to figure out how much each partner can claim as income and deductions.
Filing Must Match
You must file Texas taxes using the same filing status that you used when filing your federal taxes for that year. You cannot file a joint tax return with the IRS and a separate return with the state of Texas or vice versa. Thus, if filing separate tax returns is your best strategy for lowering your federal taxes, you must consider its effect on your state taxes before deciding how to file.
Community Property States
Since Texas is a community property state, filing your taxes separately can be complicated. The Texas government considers all property and debts to be the property of the marriage; thus, if you intend to itemize your deductions, you must split the deduction amount in half and claim only half of it as your deduction. Your spouse may choose to take a standard deduction even if you itemize, but you cannot take her half of the deduction even if she isn't using it.
Considerations Before Filing
If you file a joint tax return, you and your spouse are equally liable for paying taxes on the return and for the information claimed within it. Thus, if you suspect your spouse is engaging in questionable tax behavior, such as taking deductions he is not entitled to, it may be best to file separate returns so that you are not held responsible for the inappropriate deductions.
In addition, if one spouse owes money to the IRS, Child Support Enforcement or the Department of Education, the IRS can seize your joint refund if you file taxes together.
Itemization and Deductions
If one spouse decides to itemize because their medical expenses are high, the other spouse must also itemize. In this case, the itemization is tricky. The expenses that are being deducted can only be listed by the spouse who paid them from their own individual account.
Any expenses paid from a joint account must be split in half for each spouse to itemize. For things such as mortgages, you'll need to be able to have supporting documentation if only one social security number shows on the interest statement that the IRS receives.
Read More: Best Way to File Taxes When Separated
What to Do
If you think filing Texas taxes separately might be your best option, consult a tax professional. Your tax professional can help you determine what money and property is yours and what is community property, as well as determine the exact amounts you should claim on your Texas tax form as income, property and deductions.
A tax professional might be able to find ways for you to save money filing jointly so that you won't have to worry about the complicated laws regarding filing separately in Texas.
Jack Ori has been a writer since 2009. He has worked with clients in the legal, financial and nonprofit industries, as well as contributed self-help articles to various publications.