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.
- Your tax rate generally is higher than on a joint return.
- Your alternative minimum tax exemption amount is half that allowed on a joint return.
- 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.
- You cannot take the earned income credit.
- You cannot take the exclusion or credit for adoption expenses in most cases.
- 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.
- You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
- If you lived with your spouse at any time during the tax year:
- You cannot claim the credit for the elderly or the disabled, and
- You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
- The following credits and deductions are reduced at income levels half those for a joint return:
- The child tax credit,
- The retirement savings contributions credit,
- The deduction for personal exemptions, and
- Itemized deductions.
- Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
- 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.