Married filing separately is a tax status for married couples who choose to record their respective incomes, exemptions, and deductions on separate tax returns. This choice can optimize tax savings under certain conditions, such as significant medical expenses or miscellaneous itemized deductions.
Key Takeaways
- Married filing separately is a tax status where spouses file individual tax returns.
- Certain couples might benefit, particularly if one spouse incurs significant medical expenses or other itemized deductions.
- This status may exclude them from specific tax benefits meant for joint filers.
How Married Filing Separately Works
The IRS offers five filing status options: single, married filing jointly, married filing separately, head of household, and qualifying widow(er).
Eligibility for married status requires being married on the last day of the tax year. For instance, for filing as married in 2022, one must have been married by Dec. 31, 2022.
Filing separately might be appealing and financially advantageous for certain couples to avoid a higher tax bracket caused by combined incomes. When filing separately, each spouse’s tax return must include the other spouse’s information. If one spouse itemizes deductions, the other spouse must do so as well, often resulting in a zero standard deduction.
Although this filing status has its benefits, couples may miss out on tax credits exclusive to joint filers. It’s advisable to calculate and compare potential tax bills under both filings before deciding.
Special Considerations
Residents of community property states like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, should consult a tax professional due to the complexity of separate income rules.
Filing jointly typically offers more financial perks, bolstered by provisions of the Tax Cuts and Jobs Act (TCJA) of 2017. Exceptions include scenarios with substantial miscellaneous deductions or medical expenses.
Standard Deduction for Married Filing Separately
The TCJA significantly increased the standard deduction starting with the 2018 tax year. The 2023 standard deductions are:
- $13,850 for single taxpayers and married couples filing separately
- $20,800 for heads of household
- $27,700 for married couples filing jointly
For filing separately to be advantageous, one spouse must have substantial deductions or medical expenses. Eligible taxpayers can use the IRS Direct File system for free online filing.
Married Filing Separately vs. Married Filing Jointly
Married filing jointly often yields more tax savings, especially with disparate income levels between spouses. Filing separately might bar access to various tax breaks, such as:
Child and Dependent Care Credit
This nonrefundable credit covers unreimbursed childcare expenses including babysitters, daycare, summer camps (excludes overnight camps), and other care providers for children under 13 or qualifying dependents.
American Opportunity Tax Credit (AOTC)
The AOTC offsets costs for post-secondary education. Couples with a modified adjusted gross income (MAGI) of up to $160,000 are eligible for full credit; those making between $160,000 and $180,000 can apply for partial credit. The AOTC offers up to $2,500 annually on qualified educational expenses for a student’s first four college years.
Lifetime Learning Credit (LLC)
The LLC provides a 20% tax credit on the first $10,000 of qualified tuition fees, yielding up to $2,000 per return for undergraduate, graduate, or professional degrees. The MAGI cap for LLC eligibility in 2023 is $80,000 for single filers and $160,000 for joint filers.
Additionally, separate filers can deduct contributions to a traditional individual retirement account (IRA), but with lower income limits compared to joint filers. Retirement plan holders should verify qualifications. For instance, qualified adoption expenses allow deductions up to $15,950 in 2023.
Benefits of Married Filing Separately
An isolated tax return can be educationally advantageous if you distrust your partner’s income or find their claims dubious. Each spouse is solely liable for their return’s authenticity and its tax dues or penalties, contrasting the joint return accountability shared by both spouses.
Do You Need Your Spouse’s Income for Married Filing Separately?
In general, declaring a spouse’s income isn’t necessary unless living in a community property state.
Can You File Separately After Filing Jointly?
Yes. Spouses can alternate between filing jointly one year and separately the next.
What Are the Drawbacks to Married Filing Separately?
Aside from keeping tax liabilities independent, separate filers miss numerous tax perks available to couples filing jointly, including the earned income tax credit and the AOTC.
The Bottom Line
Deciding on a tax filing status can be straightforward for singles or widowers, but trickier for married couples due to their dual filing options. Joint filing allows tax credits and deduction maximization, while separate returns shield against a partner’s tax issues.
Related Terms: standard deduction, itemized deductions, tax bracket, tax year, tax return, tax credits
References
- Internal Revenue Service. “The Hows of Taxes: Module 5: Filing Status”.
- Internal Revenue Service. “A Tax Checklist for Newly Married Couples”.
- Internal Revenue Service. “Other Deduction Questions”.
- Internal Revenue Service. “Publication 555, Community Property: Married Individuals”.
- Internal Revenue Service. “Be Tax Ready — Understanding Tax Reform Changes Affecting Individuals and Families”.
- Internal Revenue Service. “Publication 504, Divorced or Separated Individuals”.
- Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2023”.
- Internal Revenue Service. “Direct File”.
- Internal Revenue Service. “Child and Dependent Care Credit FAQs: Am I Eligible to Claim the Credit?”
- Internal Revenue Service. “Education Credits—AOTC and LTC”.
- Internal Revenue Service. “Publication 503: Child and Dependent Care Expenses”, Pages 7-8.
- Internal Revenue Service. “Topic No. 602 Child and Dependent Care Credit”.
- Congress.gov. “H.R.1 - American Recovery and Reinvestment Act of 2009”.
- Internal Revenue Service. “American Opportunity Tax Credit”.
- Internal Revenue Service. “Lifetime Learning Credit”.
- Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2022”.
- Internal Revenue Service. “IRA Deduction Limits”. Click through to read 2022 and 2023 limits, depending on whether you or your spouse has retirement plan at work.
- Internal Revenue Service. “Retirement Topics - IRA Contribution Limits”.
- Internal Revenue Service. “Topic No. 607: Adoption Credit and Adoption Assistance Programs”.
