Tax Time: Should a Married Couple Ever File Separately?

Alden Wicker
Posted

One of the very first things you’ll choose this tax season is your filing status, which determines the deductions and credits you can take.

Generally, there are two common filing statuses: married filing jointly and single. But it’s a third, less common status that we’ll be discussing today: married filing separately.

As with most things tax-related, choosing whether to file jointly or separately as a married couple is a highly individual and complex decision. That’s why we consulted two certified public accountants to find out how common it is for a married couple to file separately, what it means for your taxes and in which situations it may apply.

What Does It Mean to File Separately?

If you were legally married as of December 31, 2013, then you have two choices for your filing status this year: married filing jointly and married filing separately.

Married filing jointly means you file one return as a unit, with your incomes and expenses lumped together for the purpose of calculating and paying taxes.

Married filing separately is not the same as filing as a single person—it means that you’re married, but you each file your own return, so you don’t take legal responsibility for your spouse’s return, and your incomes and expenses are considered separately. The federal government now recognizes same sex marriages, which gives married same-sex couples this same choice between filing statuses.

RELATED: 11 Things You’re Embarrassed to Ask About Taxes

When Should You Consider Filing Separately?

If you and your spouse have a simple financial situation—two straightforward salaries that are about equal, without any large deductions to take—you can be almost positive you should file together. To put it another way, if you don’t plan on itemizing, then don’t worry about it and file jointly.

“About 95% of married people are better off filing jointly,” says Joseph Boyce, a New York–based certified public accountant. “It’s a lower tax rate. Married filing separately is actually the highest tax rate.” In other words, filing separately isn’t for many of us—and filing incorrectly could be expensive.

So how are you supposed to figure out if filing separately is for you? “It’s difficult,” cautions Boyce, who mentions this is a good time to get a professional opinion tailored to your exact situation. “Especially if you have deductions. I would highly recommend not doing it on your own.”

That said, here are seven situations in which you may want to consider filing separately. Note that, as with most things tax-related, they’re just general guidelines, not iron-clad rules. If you think one of the following situations applies to you, you may benefit from going to an accountant or running the numbers with your go-to tax preparation software.

1. You Have Significant Deductions

For many deductions, the amount you can take depends on your adjusted gross income (AGI). If you and your spouse have unequal AGIs and you need to itemize significant deductions, it may make sense to file separately.

One common example is medical deductions, which have to total more than 10% of adjusted gross income in order to qualify. Let’s say that you and your spouse file jointly, and together you have an adjusted gross income of $250,000. In that case, the two of you need to have spent more than $25,000 (10% of your combined income) in medical expenses in 2013 in order to deduct them at all. But, if you make $50,000, your spouse makes $200,000, and you file separately, you only need $5,000 in medical expenses to qualify. If you make less than your spouse, and have more potential deductions, it might make sense to file separately.

Other deductions tied to AGI include miscellaneous itemized deductions like unreimbursed employee expenses, tax preparation fees and gambling losses. But watch out! There are some deductions and credits that you are simply not allowed to take at all if you file separately. (See why you might want to consult a professional?)

RELATED: 10 Tax Filing Mistakes to Avoid

  • B

    You cannot do a Roth conversion if you file married filing separately,”

    Not correct

    • Kitsu

      -WHY- is it not correct? That would have been a better post than just saying ‘Not correct’ and ending it there!

      • B

        Google

        • Kitsu

          Error 404: File Not Found

          You fail at life, good sir. You are a sir, right?

  • disqus_TPG6QDpw6i

    Another reason to file separately: student loans. For instance, income based repayment plans (IBR) will use the married couple’s combined salary for calculating monthly payments if you file jointly, whereas they will calculate the repayment individually if you file separately. I think this is important to note for a lot of us and was surprised to see this missing from the article!