Case — The Effect of Legal Separation on Filing Status

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TL Case Summ

THE QUESTION

Can legally separated taxpayers who live together claim married filing jointly tax status?

THE DISPUTE

Taxpayer Says: The legal separation agreement was not a decree of separate maintenance because it failed to require the parties to live apart in the future. Taxpayers continued to live together after signing the agreement, and married filing jointly status is appropriate.

Internal Revenue Service Says: Taxpayers are legally separated under state law and cannot claim married filing jointly status.

THE LAW

From Internal Revenue Code Section 6013(a): A husband and wife may elect to file jointly.

From Internal Revenue Code Section 6013(d)(2) and 7703(a)(2): An individual who is legally separated from his or her spouse under a decree of divorce or of separate maintenance shall not be considered married.

From Oregon Revenue Stat. Sec. 107.025(1) (2007): A judgment for a permanent and unlimited separation may be rendered when irreconcilable differences between the parties have caused the irremediable breakdown of the marriage.

Oregon Revenue Stat. Sec. 107.025(2) (2007): Oregon law does not require that spouses live apart before or after a court renders a judgment for permanent and unlimited separation.

THE CAUSE OF THE DISPUTE

Under federal tax law, if your marriage has not been legally dissolved by the end of a tax year, your filing status is determined by whether you’re married but considered unmarried. If you’re legally separated and have a final decree of separate maintenance, you’re considered unmarried. When you are divorced or legally separated before the end of the taxable year, you cannot file a joint return. State law determines if you are divorced or legally separated under a divorce or maintenance decree.

In this case, the taxpayers signed a legal separation agreement in the year prior to the tax return in question. However, the taxpayers continued to live together, and contend that the married filing jointly status is appropriate.

The IRS says the court decree precludes use of the married filing jointly status.

WHAT WOULD YOU DECIDE?

Make your selection, then see “The Court’s Decision” below for a full explanation

For the or for the

THE COURT’S DECISION

Download (PDF, 17KB)

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HL Carpenter, an experienced investor and a CPA, specializes in reader friendly articles on taxes and investing for individuals and small businesses, and publishes two newsletters: Taxing Lessons and Top Drawer Ink. Visit TaxingLessons.com and HLCarpenter.com.

This information should not be considered legal, investment or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment or tax advice. Always consult your legal, investment and/or tax advisor regarding your personal situation.

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For the IRS. Taxpayer and spouse were legally separated under the laws of the state of Oregon, and were not entitled to elect joint filing status.
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