This is a perennial tax question. Usually filing jointly saves a couple taxes. And joint filing is required in order to use certain tax breaks. However, there are instances where filing separately makes sense. Strategy: Figure the taxes both ways (joint/separate) and choose the option that saves you and your spouse the most money. But money aside, if you are concerned about the tax liability of your spouse, separate filing avoids joint and several liability for the taxes on a joint return.
The tax on the investment income in excess of $1,700 (may change after 2007) of a child under age 18, based on the parents’ marginal tax rate and computed on Form 8615.