Changing Your Mind: Switching Between Joint and Separate Returns After You File

Separation and divorce create filing decisions made under stress, often before anyone knows how the property division will come out. So people ask: if we file one way now, can we change it later? The answer depends entirely on which direction you are going. One direction is allowed, with limits. The other is generally closed once the due date passes.

The one-way door

Here is the short version.

Separate to joint: generally allowed. Internal Revenue Code section 6013(b)(1) lets spouses who filed separate returns for a year in which they could have filed jointly make a joint return for that year after the filing deadline has passed, subject to the limits in section 6013(b)(2).

Joint to separate: generally not allowed after the due date. Treasury Regulation 1.6013-1(a)(1) says that for any taxable year for which a joint return has been filed, separate returns shall not be made by the spouses after the time for filing the return of either has expired. IRS Publication 504 says the same: after the due date of your return, you and your spouse cannot file separate returns if you previously filed a joint return.

That asymmetry is the most important thing in this guide. Filing separately preserves options. Filing jointly forecloses them.

Separate to joint: the limits

Section 6013(b)(2) says the election to switch from separate returns to a joint return may not be made:

1. After three years from the last date prescribed by law for filing the return for that year, determined without regard to any extension granted to either spouse.
2. After a notice of deficiency for that year has been mailed to either spouse, if that spouse files a timely Tax Court petition on it.
3. After either spouse has started a suit in any court to recover any part of the tax for that year.
4. After either spouse has entered into a closing agreement for that year, or after any civil or criminal case against either spouse for that year has been compromised.

Publication 504 summarizes the timing in plain English: you can generally change to a joint return within 3 years from the due date, not including extensions, of the separate return or returns. It also says this applies to a return either spouse filed claiming married filing separately, single, or head of household, and that you use Form 1040-X to change your filing status.

What else changes when you switch

Section 6013(b) has several rules that come along with a late joint return:

• Payments carry over. All payments, credits and refunds on either spouse's separate return count toward the joint tax.
• Some elections stick. Any election, other than the election to file separately, made on a separate return that would have been irrevocable stays in place.
• The assessment period gets longer. Section 6013(b)(4) says the periods for assessment and collection include one year after the date the joint return is filed.
• Penalties can carry over. Under section 6013(b)(5), if the tax on the joint return exceeds the combined tax shown on the separate returns, the separate returns' total is treated as the amount shown on the joint return for penalty purposes, and negligence or fraud on either separate return is treated as being on the joint return.
• Criminal exposure follows the separate return. Section 6013(b)(5)(B) says the separate return remains a "return" for purposes of certain criminal false return provisions.

And the big one: once you switch to a joint return, section 6013(d)(3) makes liability for that year joint and several.

Joint to separate: the exception

There is one exception to the rule against switching from joint to separate. Under section 6013(a)(3) and Treasury Regulation 1.6013-1(d)(5), when a surviving spouse files a joint return and an executor or administrator of the deceased spouse's estate is appointed afterward, the executor may disaffirm the joint return by filing a separate return for the decedent within one year after the last day prescribed for filing the surviving spouse's return, including extensions. The survivor's return then becomes a separate return. Publication 504 notes the same exception.

That exception does not help living spouses in a divorce.

Before the due date

The bar on switching from joint to separate applies after the time for filing has expired. The regulation's language implies the obvious corollary: until the due date of either spouse's return passes, you still have room to file separate returns. If you signed and filed a joint return in February and realize in March that it was a mistake, get advice quickly, because the window closes on the due date.

Why this matters in a separation

Picture two common situations.

Situation one. You and your spouse are separated. Your spouse wants to file jointly. You are not sure what is in your spouse's business records. You file separately. Two years later, after the divorce, your former spouse's books are cleaned up and a joint return would save a significant amount. You both agree. As long as the three-year window is open and none of the other limits in section 6013(b)(2) apply, you can still file jointly using Form 1040-X.

Situation two. You file jointly to save money. A year later, your former spouse's unreported income comes to light in an audit. You want to switch to separate returns. You cannot. Your path now runs through innocent spouse relief under section 6015, which has its own tests and deadlines. See the guide to the three types of relief.

The first path costs you some tax savings up front, with an option to recover them. The second saves tax up front and takes the option away.

When the joint return is deemed filed

Section 6013(b)(3) sets rules for when a late joint return is treated as filed, which matters for the statutes of limitation and for late filing penalties. For assessment, collection and delinquency penalty purposes:

• If both spouses filed separate returns first, the joint return is deemed filed on the date the last separate return was filed, but not earlier than the last date prescribed for filing either spouse's return.
• If only one spouse filed a separate return and the other had gross income below the exemption amount, the joint return is deemed filed on the date of the separate return, but not earlier than its due date.
• If only one spouse filed a separate return and the other had gross income at or above the exemption amount, the joint return is deemed filed on the date the joint return itself is filed.

For refund purposes under section 6511, section 6013(b)(3)(B) treats the joint return as filed on the last date prescribed for filing the return, determined without regard to extensions.

That third bullet is the one that surprises people. If one spouse never filed at all and had significant income, the joint return is treated as filed only when it is actually filed, which can expose that year to late filing consequences.

Practical questions before you switch

Before amending to a joint return, ask:

1. Are you within three years of the original due date, without extensions?
2. Has either spouse petitioned the Tax Court on a deficiency, filed a refund suit, signed a closing agreement, or compromised the year?
3. Does either separate return have problems that would carry over to the joint return under the penalty rules?
4. Are you comfortable with joint and several liability for that year, including any future deficiency?
5. Who will pay any additional balance?

A word about head of household

If you qualify as considered unmarried under section 7703(b), you may be able to file as head of household instead of married filing separately. Publication 504 notes that the separate-to-joint switch applies to returns claiming head of household status as well. See the guide to head of household while separated.