When is it beneficial to file married filing separately

When it comes to being married filing jointly or married filing separately, you’re almost always better off married filing jointly (MFJ), as many tax benefits aren’t available if you file separate returns. Ex: The most common credits and deductions are unavailable on separate returns, like:

• Earned Income Credit (EIC)
• Dependent care credit (for most filers)
• Tuition credits
• Student loan interest deduction
• Child care credit, unless you lived apart from July to December
• Adoption credit, unless you lived apart from July to December
• Hope and Lifetime Learning Credits
• Credit for the elderly or disabled, if you lived with your spouse at any time in the tax year
• Exclusion of interest on Series EE or I U.S. Savings Bonds used for higher education expenses
• Special allowance of $25,000 for real estate passive activities with active participation, if you lived together at any time in the tax year
• Standard deduction, if your spouse itemizes deductions

In addition, if you received Social Security or railroad retirement benefits and you lived with your spouse at any time in 2021, you might pay more tax on these benefits if you file separate returns than if you file a joint return.

Another reason to be married filing jointly and not married filing separately could be because of your state. If you live in a community property state, a joint return is more convenient, because you’ll avoid tax rules applying to married filing separately. These states are community property states:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

Also, if you file jointly, your standard deduction (if you don’t itemize) will be higher. This usually causes your taxable income and tax to be lower.

When would I want to be married filing separately over married filing jointly?

Married filing separately (MFS) might benefit you if you have to use the Alternative Minimum Tax (AMT) on a joint return. However, this is only true if only one spouse is liable on a separate return.

Some other reasons people file separate returns are:

• For non-tax reasons, such as maintaining separate finances
• Because the spouse with the lower income can qualify for tax deductions like a medical expense deduction only by filing a separate return
• For state tax reasons. Ex: Filing separate state returns will significantly cut your state tax bill, and your state makes you file using your federal filing status. Make sure that the gains you make on the state side are greater than the cost of separate returns on the federal side.

The best way to figure out whether married filing jointly or married filing separately will benefit you the most is to prepare your returns both ways. Then, choose the filing status with the lowest net balance due or refund.

If you choose married filing jointly, both of you can be held responsible for the tax and any interest or penalty due. One spouse might be held responsible for all the tax due — even if the other spouse earned all the income. If either spouse doesn’t agree to file jointly, then both spouses must file separately. There’s an exception if one of you qualifies for head of household status (HOH).

For a complete list of the special rules when filing as married filing separately vs married filing jointly, see page 22 of Publication 17 at https://www.irs.gov/.

With all this in mind, most married taxpayers file a joint return, both for the savings it provides and for convenience.

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