The Married Filing Separately Tax Filing Status
If you are married, you and your spouse can choose whether to file separate tax returns or whether to file a joint tax return together. Though filing jointly usually gets you a bigger refund or a lower tax bill (and most married couples file joint returns), it might be to your advantage to file separately based on your specific tax situation. Read on to learn more about the Married Filing Separately status, its advantages and disadvantages, and how to file a Married Filing Separately tax return.
When you file a tax return as Married Filing Separately, you and your spouse each report your own individual income, deductions, credits, and exemptions on different tax returns. That way, you and your spouse are only responsible for your own individual tax liability. You will not be responsible for any tax, penalties, and interest that results from your spouse's tax return.
Married Filing Separately or Not?
If you and your spouse do not agree to file a joint return, then you must file separate returns, unless you are considered unmarried by the IRS and you qualify for the Head of Household filing status. You may want to file a Married Filing Separately tax return if one or more of the following situations apply to you:
- You and/or your spouse owe unpaid taxes or child support (filing a joint tax return may result in the IRS offsetting your refund to pay the taxes)
- You and/or your spouse have income-based student loan payments (payments will be based on spouse's income rather than couple's combined income)
- You are concerned that your spouse is not up-front about their tax situation (especially if you are going through a divorce)
- You and/or your spouse have a lot of medical expenses (especially if one spouse has a lower Adjusted Gross Income amount than the other spouse)
- You don't live in a community property state, which considers property earned by couple belonging to both spouses equally
- Both you and your spouse are high income earners
The basic qualifications for filing separately are the same as those for filing jointly. The only difference is that you choose to file separately, or you and your spouse cannot agree to file jointly so you have to file separately.
You can file your federal return as Married Filing Separately even if you reside in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), but you will need to do some extra work. In addition to reporting your separate income and deductions on your tax return, you will need to also report half of your combined community income and deductions using a worksheet.
Advantages of Filing Separate Returns
A joint return will usually result in a lower tax liability or a bigger refund than two separate returns. However, there are a few reasons why you (and your spouse) might want to file separate tax returns:
- You will be responsible for only your taxes. By using the Married Filing Separately filing status, you will keep your own tax liability separate from your spouse's tax liability. When you file a joint return, you will each be responsible for your combined tax bill (if either of you owes taxes).
- If you suspect that your spouse may be evading taxes or has cheated on a tax return, you can keep yourself safe from an IRS audit by filing a separate return. You will not be liable for your spouse's fines, penalties, interest, and back taxes.
- If you want to protect your own refund money, you may want to file a separate return, especially if your spouse owes child support, student loan payments, or back taxes. All of these may be taken from your tax refund by the IRS after you file a joint return. If you file a joint return, your refund is fair game because your tax liability has been combined with that of your spouse.
- If your adjusted gross income on a separate return is lower than it would have been on a joint return, you may be able to claim a larger amount for some deductions that are limited by your AGI, such as medical expenses.
- You MIGHT get a bigger refund (or owe less tax) if you file separately. However, this is not usually the case. Therefore, we encourage you to estimate and compare the results of filing a joint return with the results of filing separate returns using our free tax calculator.
All cases are unique, and there are really no hard and fast rules about when filing separately will get you a bigger refund (or a lower balance due). That being said, filing separately can often benefit you if you have a lot of itemized deductions that are subject to an AGI "floor". Consider medical expenses: For Tax Year 2019, you can only deduct un-reimbursed medical expenses that are over 10% of your adjusted gross income, so you can deduct more of your expenses if you do not combine your AGI with that of your spouse. Also consider investment expenses and unreimbursed employee business expenses, which are subject to a 2% floor (you can only deduct the expenses that exceed 2% of your AGI).
IMPORTANT: If you are not required to file separately, you should compare the results of using each filing status (Married Filing Separately and Married Filing Jointly), and then use the filing status that gives you the best outcome for your particular situation.
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Disadvantages of Filing Separate Returns
If you and your spouse file separate returns, your access to certain tax benefits will be severely limited. Because of this, the combined tax calculated on separate returns is generally higher than the tax calculated on a joint return.
If your filing status is Married Filing Separately, the following limitations will apply:
- If your spouse itemizes deductions, you cannot claim the standard deduction. In order to claim deductions, you will have to itemize as well.
- If you can claim the standard deduction, your standard deduction amount will be half of what it would be on a joint return.
- You will generally have a higher tax rate than you would have on a joint return.
- Your Alternative Minimum Tax exemption amount will be half of what you would get on a joint return.
- In most cases, you cannot claim the Credit for Child and Dependent Care Expenses, and the amount that you can exclude from income under an employer's dependent care assistance program is limited to half that of a joint return filer. (If you are legally separated or living apart from your spouse, then you may still be able to file separately and claim the credit.)
- You cannot claim the Earned Income Credit.
- In most cases, you cannot claim the Adoption Tax Credit, nor can you exclude employer-provided adoption benefits from your income.
- You cannot claim any education tax credits (the American Opportunity Credit and Lifetime Learning Credit).
- You cannot take the student tax deduction for student loan interest.
- You cannot exclude any interest income from U.S. savings bonds that you used for education expenses.
- If you lived with your spouse at any time during the year, you cannot claim the Credit for the Elderly or the Disabled.
- If you lived with your spouse at any time during the year, you have to include in your taxable income a larger amount (up to 85%) of any Social Security benefits or equivalent railroad retirement benefits you received.
- Your Child Tax Credit will be limited to half the amount that it would be on a joint return.
- Your Saver's Credit will be limited to half the amount that it would be on a joint return.
- Your capital loss deduction limit will be half the amount that it would be on a joint return.
- If you lived with your spouse at any time during the year, and you or your spouse were covered by an employer-sponsored retirement plan, you may not be able to deduct some or all of your contributions to a traditional IRA if your income is over a certain amount. This amount is much lower than it would be for a joint return.
- If you lived with your spouse at any time during the year, you cannot deduct a loss from passive rental real estate activity. If you did not live together, you can claim this deduction, but the amount will be limited.
Some of the above limitations may not affect you at all. Others may make you reconsider filing separately. For example, numbers 8-10 make Married Filing Separately a particularly unfriendly filing status for students. In any case, it is a good idea to estimate your tax refund or liability using both Married filing statuses so you know which one would be most beneficial to you.
How to File or efile as Married Filing Separately
You can claim the Married Filing Separately filing status when you prepare your tax return on Form 1040. You will need to enter your spouse's full name and your spouse's SSN or ITIN in the spaces provided on the form.
It is easy to file as Married Filing Jointly on efile.com. Choosing your filing status is one of the first things you do when you start preparing your tax return online. Once you select your filing status efile.com will then apply the correct tax rates and standard deduction amount to your return.
After the IRS accepts your Married Filing Separately tax returns, you can amend your returns to a single joint tax return up to 3 years after the original tax deadline (this does not include extensions). Find out how to file an amended return.