Is Filing Married Jointly or Separately Best For Me?
In many situations, it's generally more advantageous for married couples to file joint tax returns. It may or may not be the case for you. Read on for information to determine whether the Married Filing Jointly or Married Filing Separately is the right tax return filing status for you.
What Are the Advantages of Filing Married Jointly?
Filing jointly usually results in a bigger tax refund or a lower taxes owed. Your standard deduction may be higher and you may qualify for other tax benefits that do not apply to other tax filing statuses.
What Are the Tax Benefits of Filing Separate Tax Returns?
There are several reasons why you may consider filing separate returns instead of one joint return:
- You will only be responsible for your individual taxes
- You keep your tax liability separate from your spouse's tax liability. Filing a joint tax return makes both of you responsible for your combined taxes.
- If you think your spouse has cheated on their tax return or may be evading taxes, you can keep yourself safe from an IRS audit by filing a separate return. You will not be responsible for your spouse's fines, penalties, interest, and back taxes.
- You can keep your own tax refund if you do not want the IRS to offset it for any student loan payments, child support, or back taxes your spouse owes.
- 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 and/or your spouse don't live in a community property state, which considers property earned by couple belonging to both spouses equally.
- You and your spouse are high income earners.
What Are the Disadvantages of the Married Filing Separately Status?
If you file separate tax returns, your access to certain tax benefits will be greatly limited. In addition, your calculated tax on the separate returns would generally be higher then the tax calculated on a joint tax return. Here are the other limitations:
- You cannot claim the standard deduction if your spouse itemizes deductions. Therefore, you will need to itemize too.
- Your standard deduction amount will be half of what it would be on a joint return.
- Your tax rate will generally be higher than on a joint return.
- Your Alternative Minimum Tax exemption amount will be half of the amount on a joint return.
- You cannot claim the Credit for Child and Dependent Care Expenses in most cases. Any amount that you can exclude from income under an employer's dependent care assistance program would be limited to half that would be on a joint return. However, you may claim the credit and file separately if you are legally separated or living apart from your spouse.
- You cannot claim the Earned Income Credit.
- You would not be able to claim the Adoption Tax Credit in most cases. In addition, you cannot exclude employer-provided adoption benefits from your income.
- You will not be able to claim any education tax credits.
- You cannot claim the Student Loan Interest Tax Deduction.
- You will not be able to exclude any interest income from U.S. savings bonds that you used for education expenses.
- You cannot claim the Credit for the Elderly or the Disabled if you lived with your spouse at any time during the year.
- You will need to include a larger amount (up to 85%) of any Social Security benefits or equivalent railroad retirement benefits you received. if you lived with your spouse at any time during the year.
- You can only claim half of the Child Tax Credit, Saver's Credit, and/or the capital loss deduction.
- 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 traditional IRA contributions if your income is over a certain amount. This amount is much lower than it would be for a joint return.
- You cannot deduct a loss from passive rental real estate activity if you lived with your spouse at any time during the year. However, you can claim the deduction if you did not live together, but the amount will be limited.
What is the Best Way to Determine Which Married Filing Status is Right for Me?
We encourage you to use the free Taxpert.com Tax Calculator to estimate the results of preparing a joint return versus separate returns. That way, you can select the filing status that gives you and your spouse the biggest refund or the lowest tax liability.