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Should You File Married Filing Jointly?

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One of the most frequently asked questions I get during tax season is “Should I file Married Filing Jointly or Married Filing Separately?”

My standard answer is to ask your preparer to prepare the return both ways so you can see which gives you the highest refund.

More specifically, Married Filing Separately does not offer the same benefits as Married Filing Jointly.

From IRS Publication 501 (I emphasized the bolded items)

If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

 

  1. Your tax rate generally is higher than on a joint return.
  2. Your alternative minimum tax exemption amount is half that allowed on a joint return.
  3. You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See Joint Return Test in Publication 503, Child and Dependent Care Expenses, for more information.
  4. You cannot take the earned income credit.
  5. You cannot take the exclusion or credit for adoption expenses in most cases.
  6. You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction.
  7. You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
  8. If you lived with your spouse at any time during the tax year:
    1. You cannot claim the credit for the elderly or the disabled, and
    2. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
  9. The following credits and deductions are reduced at income levels half those for a joint return:
    1. The child tax credit,
    2. The retirement savings contributions credit,
    3. The deduction for personal exemptions, and
    4. Itemized deductions.
  10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
  11. If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.
Adjusted gross income (AGI) limits.    If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses.
Individual retirement arrangements (IRAs).    You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Your deduction is reduced or eliminated if your income is more than a certain amount. This amount is much lower for married individuals who file separately and lived together at any time during the year. For more information, see How Much Can You Deduct? in chapter 1 of Publication 590-A.
Rental activity losses.    If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to $25,000. This is called a special allowance. However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. See Rental Activities in Publication 925, Passive Activity and At-Risk Rules.
I understand that there may be “back tax” issues, child support or unfiled taxes that could affect your particular situation, so again, have your preparer run the return both ways so you can see whether Married Filing Jointly or Married Filing Separately is right for you.