When you file separately, you must follow your state's definition of separate and community property.
"You can't just say, 'That's not my money,'" notes Dentartigh.
"Spouses with more at risk can use a prenuptial agreement to protect their separate assets," adds Dentartigh, who finds that problems usually arise at divorce time.
Good record keeping can support deductions that reduce federal taxes.
Depending on your state, the types of separate property you want to document may include: The IRS suggests married couples in community property states look at their tax situation under both joint and separate filing options to determine which version saves them the most (Turbo Tax will do this for you).
Filing a joint return may be less complex and qualify you for tax credits.
"Whose Social Security number is attached to the asset matters," she says.
Keeping track of separate assets also serves as a financial security blanket should your marriage fail.
When you file jointly, you report all income from all assets.You can use a self-selected Personal Identification Number (PIN) just as you would at a bank ATM. The following 37 states and the District of Columbia allow you to e-file your state return at the same time you file your federal tax return online from your personal computer.This is called the Federal/State E-file for Taxpayers program.Community property couples must pay attention to the documents they use to support their tax returns.Dentartigh cites an example of a spouse claiming a deduction for half of the mortgage interest on a jointly owned home who runs into trouble when the Internal Revenue Service can’t match it with the 1098 mortgage interest statement supplied by the mortgage company.