If you're married, there are circ*mstances where filing separately can save you money on your income taxes.
Key Takeaways
- When both spouses work and earn about the same amount, filing a joint return might put a couple into a higher tax bracket, while filing separately results in a lower tax rate.
- If one spouse’s out-of-pocket medical expenses exceed 7.5% of their individual adjusted gross income (AGI), but don’t exceed 7.5% of their joint AGI, they might be able to lower their taxes by filing separately and taking the medical deduction.
- When a couple’s AGI is too high to qualify for casualty losses in a federally declared disaster area, filing separately may make it possible for one spouse to claim the deduction and lower the couple’s overall tax bill.
- If one spouse has a large tax bill and the other is due a tax refund, filing separately will protect the refund. The IRS won't apply it to the other spouse's balance due..
Filing jointly or separately
The IRS considers taxpayers married if they are legally married under state law,live together in a state-recognized common-law marriage, or are separated but have no separation maintenance or final divorce decree as of the end of the tax year.
Of the 150.3 million tax returns filed in 2016, the latest year for which the IRS has published statistics (at the time of writing), 3.07 million belonged to twosomes who filed separately.
- These partners reported individual income and expenses on separate tax returns.
- They had to agree on either bothitemizing expenses or both using the standard deduction.
- If they had similar incomes, filing separately and using their various deductions or medical expenses likely helped them save taxes.
Filing separately with similar incomes
A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount.
- When they compare the tax due amount under both joint and separate filing statuses, they may discover that combining their earnings puts them into a higher tax bracket.
- Their savings depends on a variety of other factors, however, including their investment situation and whether they have children.
- The "married filing separately" status reduces the deduction for IRA contributions and eliminates certain tax credits, among other tax breaks.
TurboTax Tip: When filing separately, married couples must agree to either both itemize expenses or both use the standard deduction.
Using miscellaneous deductions by filing separately (for tax years prior to 2018)
Miscellaneous deductions can lower taxable income, but in order to enter them on Schedule A, they must add up to more than 2% of adjusted gross income (AGI).
- Spouses with union dues, job-search costs, tax-preparation fees and un-reimbursed business expenses may find their miscellaneous deductions don't qualify when their higher combined income raises their AGI.
- A spouse who travel frequently for business could rack up a sizable tally in airline fees for baggage and itinerary changes that makes the miscellaneous deduction worth pursuing.
Beginning in 2018, these types of miscellaneous expenses are no longer deductible.
Filing separately to save with unforeseen expenses
Adjusted gross income also determines if a couple can use un-reimbursed health care costs and casualty losses on Schedule A to save taxes.
- Unless out-of-pocket medical expenses exceed 7.5% of AGI, they don't qualify as a deduction.
- Casualty losses must alsototal more than 10% of AGI and occur in a federally declared disaster area.
The spouse with the loss or substantial medical outlay calculates deductibility against his or her own lower AGI when the couple files separate returns. When one spouse can lower taxable income this way, married filing separately might trim a couple's overall tax burden.
Filing separately to guard the future
When you don't want to be liable for your partner's tax bill, choosing the married-filing-separately status offers financial protection: the IRS won't apply your refund to your spouse's balance due. Separate returns make sense to prevent the IRS from seizing a spouse's tax refund when the other has fallen behind on child support payments.
Couples in the process of divorcing may shun joint returns to avoid post-divorce complications with the IRS, while a spouse who questions her partner's tax ethics may feel more comfortable living a separate tax life.
Couples living in community-property states should consider state law when deciding how to file.
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FAQs
A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount. When they compare the tax due amount under both joint and separate filing statuses, they may discover that combining their earnings puts them into a higher tax bracket.
Will I get more taxes back if I file married filing separately? ›
What about Married Filing Separately? On the other hand, couples who file separately typically get fewer tax benefits. Separate tax returns may result in more tax. In 2023, Married Filing Separately taxpayers get a Standard Deduction of $13,850.
What benefits do you lose when married filing separately? ›
Other tax credits that aren't available to married couples filing separately include the Earned Income Tax Credit (EITC), the Adoption Tax Credit and the Credit for the Elderly or Disabled.
What are the disadvantages of filing taxes separately when married? ›
What are some disadvantages of married filing a separate tax return?
- Unable to take a deduction for student loan interest.
- Typically limited to a smaller IRA contribution deduction.
- Disqualified from several tax credits and benefits available to those married filing jointly.
In most cases, you will get a bigger refund or a lower tax bill if you file jointly with your spouse. However, there are a few situations in which filing separately can be more advantageous, including when one spouse has significant miscellaneous deductions or medical expenses.
Does married filing separately ever save money? ›
A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount. When they compare the tax due amount under both joint and separate filing statuses, they may discover that combining their earnings puts them into a higher tax bracket.
Should high income couples file separately? ›
Key Takeaways
Though most married couples file joint tax returns, filing separately may be better in certain situations. Couples can benefit from filing separately if there's a big disparity in their respective incomes, and the lower-paid spouse is eligible for substantial itemizable deductions.
Do you pay more taxes when married filing separately? ›
And while there's no penalty for the Married Filing Separately tax status, filing separately usually results in even higher taxes than filing jointly. For example, one of the big disadvantages of Married Filing Separately is that there are many credits that neither spouse can claim when filing separately.
What credits cannot be claimed when married filing separately? ›
You can't take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the deduction for tuition and fees. You can't exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
Can you claim head of household if married filing separately? ›
Who can be “considered unmarried” for Head of Household? Married taxpayers may be “considered unmarried” and file as Head of Household if they: • File a return for the tax year separate from their spouse. Paid more than half the cost of keeping up their home.
Therefore, if one of you paid alone from your own account, that person can claim all of the mortgage interest and property taxes. In most cases, if you paid the expenses with a joint account you must divide the expenses evenly.
What happens if you are married but file separately? ›
Married filing separately is the ideal tax filing status if both spouses want to keep their tax liabilities separate. But if you file separate returns, you miss out on a number of tax credits and deductions that are meant for married couples, such as the earned income tax credit and the American Opportunity Tax Credit.
What is the standard deduction for married filing separately? ›
The 2023 standard deduction is $13,850 for single filers and those married filing separately, $27,700 for those married filing jointly, and $20,800 for heads of household. It is claimed on tax returns that were due April 15, 2024.
Do you get more money back filing married or separately? ›
Those filing jointly are also eligible for a larger standard deduction amount, which when combined with the above credits could equal a better tax benefit. In 2023, married filing separately taxpayers receive a standard deduction of only $13,850 each compared to the $27,700 those who filed jointly can get.
What is the best filing status for married couples? ›
Married filing jointly is an income tax filing status available to any couple who has married by Dec. 31 of the tax year. This tax status is generally the best choice as it extends a number of tax credits designed to benefit families.
Which filing status takes out the most taxes? ›
Which taxpayers pay income tax at the highest rates and the lowest rates? (The highest tax rates apply to taxpayers who use the married filing separately filing status. The lowest tax rates apply to taxpayers who use either the married filing jointly or qualified widow(er) with dependent child filing status.)
What is the tax rate for married filing separately? ›
Tax brackets in 2024
| Tax Rate | Single Filers/ Married Filing Separate | Married Individuals Filing Jointly/ Qualifying Surviving Spouses |
|---|
| 10% | $0 – $11,600 | $0 – $23,200 |
| 12% | $11,600 – $47,150 | $23,200– $94,300 |
| 22% | $47,150 – $100,525 | $94,300– $201,050 |
| 24% | $100,525– $191,950 | $201,050– $383,900 |
4 more rowsIf you file as Married/Registered Domestic Partner (RDP) and you file separately, you cannot qualify for EITC unless you had a qualifying child who lived with you for more than half of 2023 and either of the following applies: You lived apart from your spouse/RDP for the last 6 months of 2023, or.
