If the husband’s and wife’s names and signatures appear on a state or federal personal income tax return, both are liable for the taxes. If a couple files jointly, the Internal Revenue Service generally holds each spouse responsible for the entire debt.
In some circumstances, a spouse who signed a joint tax return can be excused from liability if the spouse can prove that he or she is an innocent spouse. A wife or husband can be considered an innocent spouse if he or she did not know–and had no reason to know–that the tax return understated the true tax.
That is often hard to prove. For example, the Wall Street Journal reported a case in which the wife of an IRS auditor did not know that her husband was taking bribes, but neither did she ask how they could afford expensive education for their children and country club dues on his government salary. The wife, as well as the husband, was found liable, for $150,000 in unpaid taxes and penalties. (The husband also went to jail.)
On the other hand, a wife who relied on her husband and a certified public accountant to file a proper tax return, was held not to be liable when a deduction for one of the husband’s tax shelters was not allowed by the IRS.
If a married person wants full protection against possible liability for inaccurate tax returns filed by his or her spouse, the best approach is to file as "married filing separate return." That, however, usually results in a higher combined tax payments for the husband and wife than if they filed a joint return.
A married couple’s income tax payments may be higher or lower than the taxes would be if the couple remained single depending on the income levels of each spouse. If one spouse has a high taxable income and the other spouse has a relatively low taxable income, they will generally pay less income tax if they are married and filing a joint return than if they are single and filing as single persons.
For wives and husbands who both have high incomes, their combined tax will be higher when they file as married persons than if they file as two single persons. Members of Congress periodically promise to remove the "marriage penalty" from federal income tax laws, but as of June 2000, that has not happened.
Years ago, there were stories about financially well-off married couples who would go to the Caribbean each December, obtain a divorce, file tax returns as single persons for that year to save money, and then remarry in the new year. Such a practice could be regarded as tax fraud. In any case, the savings are not as great as they were in years past.