Are there any negative consequences of filing married filing separate?
To avoid the Marriage Penalty, many tax payers have decided to file their tax return as married filing separate. However, I would urge these taxpayers to be aware of several negative consequences of choosing married filing separate on the tax returns for the tax year 2007.
Here are 4 of the important negative consequences of filing married filing separate in the tax year 2007. These are as follows:
1. Neither of the spouses may be able to deduct any qualified education loan interest as the IRS rules require that "this credit is available only when a joint tax return is filed."
2. The Child and Dependent care credit, Hope and Lifetime learning credits would be disallowed for taxpayers filing as Married Filing Separate, as these are only available only when a joint tax return is filed.
3. The IRS rules states that "neither of the spouses may be eligibile to deduct contributions to their respective IRA's "if either you or your spouse was covered by an employer's retirement plan and you file separate returns."
4 Finally, the IRS rules also state that "a Roth IRA contribution or conversion" would not be available to taxpayers filing as Married Filing Separate, as these are only available only when a joint tax return is filed.
It is worth examining the above consequences before making the decision to file married filing separate to ensure that these consequences do not negatively impact you more than the marriage penalty when filing married filing jointly!