Most married couples file their tax returns as Married Filing Jointly (MFJ) which is generally tax advantageous when compared to the other alternative which is Married Filing Separately (MFS). It needs to be noted though, that filing jointly is an annual election by both spouses and cannot be used if one spouse does not agree to sign (a frequent issue during divorce proceedings).
In the recent court case of Moss v. Commissioner, Mr. Peter Moss filed his tax return MFJ even though his wife refused to sign. Unfortunately, The Tax Court decided in favor of the Internal Revenue Service (IRS) based upon his inability to show that he had the authority to file for his wife who he contended was not mentally competent. If the couple had done estate planning which included a General Power of Attorney (GPOA), the case very likely would have been decided in his favor. The Court sited the absence of such a document in ruling that his return must be filed as MFS which resulted in an increased tax liability for the year.
Despite the narrow set of facts in this case, it shows that planning for incompetency is important and is another reason why comprehensive estate planning documents are vitally important. For the full article on this case click here: https://www.taxprotoday.com/news/tax-court-no-mfj-status-where-spouse-refused-to-sign. At Hoffman & Associates, preparing estate planning documents is our bread and butter. Whether you are in need of basic estate planning such as a Will, a GPOA or a Healthcare Power of Attorney (HPOA) or are in need of more complex estate planning, we are here to help. We pride ourselves on personally tailoring all estate planning documents to avoid common pitfalls, such as probate, creditor issues, administrative and costs, family disputes, tax considerations, guardianship issues and more.
For more information regarding this case or any other estate planning concern, please contact us at 404-255-7400 or firstname.lastname@example.org.