Federal tax laws apply to all U.S. taxpayers, no matter what state they call home. In Texas, as elsewhere, married couples can file separate income tax returns. In fact, the federal return is their only opportunity to do so, as Texas does not collect state income tax. Of course, there's always a catch: Texas is a community property state, and filing that separate federal return in the Lone Star State can be tricky.
Separate Returns in Texas
In Texas, you must qualify as married on the last day of the tax year to file a joint or separate federal tax return. That means you are legally married, without a divorce or separation decree. You may also qualify by taking part in what Texas law calls "informal marriage." This means you have a registered declaration of informal marriage with the county clerk, or you meet three conditions: you mutually agree to be informally married, you live together in Texas, and you represent yourselves as married to others. If you're in a same-sex union, the IRS will recognize the marriage -- no matter where you live now -- if the ceremony took place in a state that recognizes same-sex marriage. As of February 2014, that list didn't include Texas.
Reporting Income, Deductions and Exemptions
Although the laws vary from one state to the next, a community property state generally recognizes a couple's assets and income as shared equally, no matter what each individual spouse owns or earns. The IRS rules require you to follow state law on community property and the division of income. On a married, separate return in Texas, that means each spouse reports 50 percent of all income earned by the couple during the tax year. In addition, each spouse can take one-half of deduction amounts (several tax credits, such as the earned income credit, are not available to separate filers). Of course, if you have one, three or another odd number of children, the exemptions are not going to show a 50/50 split. You can't divide an exemption between two different returns.
Investment Income and Separate Assets
Several community property states allow individual spouses legal title to their individual investment income, but not Texas. In this state, your interest, dividends and capital gains are shared right down the middle. The major exception would be for any assets you owned before the marriage -- income from this property belongs to you, individually. Also, if you used legally separate funds for IRA contributions, medical expenses, self-employed health insurance premiums, and other deductible expenses, you can apply these 100 percent to a separate write-off. The IRS will also allow you to claim income and deductions for assets that you have legally agreed to separate by Texas law.
Change in Status
If your marriage ends by the death of your spouse during the year, the IRS considers you married for the tax year and allows you to file a separate return for that year. If you remarry, then you may file a separate return with the new spouse, assuming you were married to your newbie on the last day of the year. If your marriage is annulled, then in the opinion of the IRS you were never legally married. If you filed a joint or separate return in previous years, you'll have to file amended returns for those years. However, the IRS only allows you to amend returns up to three years after the original due date of the old return.
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