Resources
Why YOU Should Care
Generally, couples who are legally married as of December 31 of the year must file a married return (either as Married Filing Jointly or Married Filing Separately) for that year. An exception exists for couples who live apart when one is maintaining the household of a child.
The short answer is that filing jointly is almost always better tax-wise. Not only are the rates more favorable, but numerous credits and deductions are disallowed for couples filing separately.
Disadvantages of Filing Separately
Couples who file Separately may not be able to claim the following deductions:
- Tuition and fees deduction and other education credits
- Student loan interest deduction
- Child and Dependent Care Credit
- Earned Income Tax Credit
- Credit for the Elderly or Disabled
Couples filing Separately also face lower IRA deduction limits.
Additionally, both spouses must both itemize even if that means one party has an itemized deduction lower than the standard deduction to which they’d otherwise be entitled.
Reasons to File Separately
- One of you is running for public office. In this case, there is pressure to make the tax return public and the spouse then tends to file separately to keep some family assets private.
- One of you is trying to qualify for a lower student loan payment on an income-based repayment schedule. In this case, filing separately would give one spouse a lower income (as it would be just his or her income not the combined household total).
If couples weren’t going to benefit from any of the disallowed credits and deductions listed above, they may also choose to file separately if they to lower adjusted gross income and thus the threshold to deduct medical expenses, miscellaneous deductions, and other deductions determined by an adjusted gross income percentage. However, this benefit may be offset by the less favorable rates for the MFS status, so consult your tax adviser.
