Host: What does Married Filing Separately mean on a tax return?
Aurthur Auerbach: Married Filing Separately means that the couple married as of 12/31 decides to file two separate returns. Now this is pretty important. The reason is that if you are not really sure where your spouse's income is coming from or what they are actually doing in the Internal Revenue Code there are provisions for something called 'Innocent Spouse.
' If you really have some serious doubts about what the other spouse is doing, my recommendation would be to file a separate return because then you are only responsible for what you put on your tax return.
If you sign a joint return you are responsible for that entire tax return. So in 40 plus years obviously, I have seen scenario's where somebody walks in and says, "Honey, I have got the tax return. Don't worry about it. Just sign here.
" That's the point where you might want to start asking questions, look at it, because when you sign your name it's signed on the Penalty of Perjury and you are responsible for everything on that tax return. Now that we will refer to a planning opportunity for the 2007-08 year because of the rebate or Economic Stimulus Program that the Congress has enacted. You might find that if you file jointly, together, you are over the Adjusted Gross Income limit to get a rebate check or a credit 1:31, but if you file separately, your income might then drop down on both returns to where you would qualify for the rebate check or the credit.