Separate returns might be better if there are a substantial number of unreimbursed medical expenses. Separate returns might also result in lower total income taxes when you take into account state income taxes. The decision to file a joint return is very important, because once a husband and wife file a joint return, they can t change their mind later and file two separate returns. On a joint nonresident return, this would include the military income of a nonresident servicemember. To avoid this result, a married couple should consider filing separate returns.
Some states permit military families to separate returns even if they filed a joint federal return.
In addition, last year California changed it laws to allow married military taxpayers to file separate returns after they filed a joint California return. However, this change only applies for tax returns for 2000 and later. The best way to determine what s best in your circumstance is to compare your total tax filing two separate returns with your total tax filing a single joint return and then use the filing status that requires the lower amount of total tax. Filing separate returns can be complicated, particularly if both spouses work. If you or your spouse is from a community property state, each of you is taxable on one-half of the community income.