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Married Filing Separately: What It Is & When To Do It | Full Guide

Most married couples file a joint tax return, but did you know that you can file separate returns even if you are married? The IRS rules allow you to choose your own filing status at tax time, so you can select the status that works best for your situation. In most cases, filing a joint income tax return makes the most sense for couples. Joint returns provide many benefits, but filing separately can be a good idea in some cases. In fact, it can sometimes lead to bigger tax credits or a larger tax refund. So, when does it make sense for you and your spouse to file separate returns? Keep reading and we will tell you everything that you need to know about filing separate tax returns including when it might be a good idea for you.

Income Tax Filing Status Options

There are actually five different filing status options that tax filers can choose from. You can choose whichever option fits your situation, and you can even change it from one tax year to the next. Here are the different options and some details about each.

 

Single

This one is fairly self-explanatory. The single filing status is for individuals who are unmarried. It can also apply to individuals who do not fit into any of the other categories. Even if you have gotten married since the end of the tax year, you must still file as single if you were not married on the last day of the tax year.

 

Married Filing Jointly

This is the most common filing status for married taxpayers. Filing jointly means that the spouses combine their incomes and credits on their return. Filing jointly also allows couples to take advantage of multiple tax credits like the child tax credit, earned income tax credit, child and dependent care credit, American Opportunity credit, lifetime learning credit, IRA deductions, and many other tax deductions and exemptions.

 

Married Filing Separately

Can married couples file taxes separately? Absolutely! This filing status is for married couples who need to file individual tax returns. While this is not extremely common, there are some situations when this is a good idea. Filing individual income tax returns usually leads to a higher tax bill, but that is not always the case. We will discuss in more detail when you might want to separate your federal returns.

 

Head Of Household

This status is for single filers who have either a dependent or parent for whom they pay more than half their expenses. Typically this filing status allows you to claim a higher standard deduction and pay lower taxes than most single filers.

 

Qualifying Widow(er)

If your spouse is deceased and you remain unmarried for at least two years, then you can file using the qualifying widow(er) status. This allows a single filer to take advantage of the married filing jointly tax rates and deductions on his or her Federal tax return.

 

Advantages Of Married Filing Separately

Many people wonder when should married couples file taxes separately? What are the benefits of married filing separately? First, this status allows you to file a separate return from your spouse if you are legally separated. You may be in a situation where you do not wish to file a joint return with your spouse and share your financial information with them. Filing separate returns can help you avoid this situation as you do not need to share anything on your own return with your spouse.

If you suspect that your spouse may be committing tax fraud or evading taxes, then it might be a good idea to file separately. Filing jointly can put you on the hook for tax liabilities that your spouse might owe. You might be wondering, “Do I need to file taxes on my own?” If you are married filing separate returns, then you can potentially avoid any trouble that your spouse might be getting into. This is one of the largest benefits of the married filing separately status. 

Finally, filing separately can offer big financial advantages for couples who have largely disparate income or deductions. If one spouse makes substantially more money than the other, then it might make sense to file separate returns. In addition, if one spouse could take advantage of many itemized deductions, then it might make sense to file separate returns. One thing to note is that filing separately does not affect how long you need to keep your tax returns. You should always follow the IRS rules for keeping your records regardless of your filing status.

 

Drawbacks Of Married Filing Separately

When a couple files separate returns, they miss out on many important tax breaks and deductions that joint filers receive. Not only that, but you will also have to report your spouse’s information, including their Social Security number and adjusted gross income (AGI), on your return. If your spouse uses itemized deductions, then you will have a standard deduction of zero. While it might seem like it makes sense to file separate returns because your separate incomes would place you both into lower tax brackets, the tax benefits of a joint return almost always outweigh those of separate returns.

While it might seem like you would be in a lower tax bracket by filing separate returns, the standard deduction is quite lower. The standard deduction for joint filers is double that of single filers. In addition, if you file separately, you cannot deduct student loan interest payments, you must use smaller IRA contributions, and you can only receive a smaller capital loss deduction. You should also remember that if you live in a community property state, then the rules about reporting separate incomes can be complicated. You should always consult a tax professional in that case.

 

How To Choose The Proper Filing Status For Your Tax Return

Obviously, choosing a filing status is an easy decision in some cases. If you are unmarried and do not provide care or living expenses for anyone else, then you will use the single filing status. You will want to use the head of household status if you are unmarried and provide care or living expenses for a legal dependent or parent. Similarly, if you are a qualifying widow or widower, then that is the status you should select. However, if you are married, then choosing between married filing separately vs jointly can sometimes be a difficult decision.

In most tax situations, you will be better off selecting the married filing jointly status. One of the situations in which you might need to file separately is if you have no children, one spouse has substantially higher taxable income, and the spouse with the lower income has large itemized deductions like medical expenses for the year. In that case, it might make sense for you to file separately, even if you file jointly every other year. As mentioned before, you can choose a different status in different years, so you should consult your tax professional to determine if filing separately makes sense in your situation.

 

The Bottom Line

The IRS offers five different filing status options, and choosing between them can sometimes be difficult. If you are married, then you can choose to file jointly or separately. Filing jointly almost always provides the bigger tax benefit, although there are a few specific circumstances that might make you consider filing separately. Since joint filers get access to more tax credits and deductions, make sure that you know exactly what the effects of filing separately would mean for you. The only couples who usually benefit from filing separately are those with no children and greatly disparate income levels. Just remember that you still must include your spouse’s information on your return, and filing separately can help protect you from trouble if you suspect that your spouse might be hiding income or breaking other tax rules.

 

Frequently Asked Questions

When should married couples file separately?

Generally, married couples should only file separately in a few limited situations. When one spouse has much lower income, but high itemized deductions, this is when it usually makes the most sense to file separately. By filing jointly, the couple’s gross income might be too high to claim those deductions. However, by filing separately, one spouse is able to take advantage of those deductions. This often occurs when one spouse has high medical expenses for the year.

 

Are you penalized for married filing separately?

So, is it better to file jointly or separately? Do you get a tax penalty for filing separately? Technically, no, you are not penalized for filing separately. However, in practice, you are penalized in a way. You are not allowed to take advantage of many tax credits available to those filers who choose to file jointly. In addition, the deductions that you see from IRA contributions and other things are lower than those that joint filers can receive. So, while you technically receive no penalty for filing separately, you do receive a penalty in a way because you do not receive the same level of tax credits.

 

What is the difference between married filing jointly and married filing separately?

So, what’s the difference in married filing jointly vs separately? Married jointly means that the spouses will combine incomes and deductions onto a single tax return. Those filing separately will report their individual income and deductions on separate returns. However, even when you file separately, you must still report your spouse’s information on your return. When you file separately, you lose out on many deductions and credits that those who file joint returns will receive.

 

What are the benefits of filing jointly?

There are many benefits to filing jointly. In general, you are eligible for a higher standard deduction and you can take advantage of multiple tax credits. Couples with children often receive even more deductions and tax advantages by filing a joint return. Regardless of your filing status, the due date for your return will remain the same. Even if you have a deferred tax liability, your taxes will be due on the same date whether you file jointly or separately.

Elliot Marks

Elliot Marks

Elliot has spent years providing clear and concise information to help navigate the complex nuances of social security and many other government services in the United States. Elliot has a passion for helping those in need of these services to be able to find timely access to news and information that is relevant and helpful to their daily lives.