What Is Married Filing Separately?

Married filing separately is a tax status for married couples who choose to record their respective incomes, exemptions, and deductions on separate tax returns. There is a potential tax advantage to filing separately when one spouse has significant medical expenses or miscellaneous itemized deductions or when both spouses have about the same amount of income.

Married filing separately can be contrasted with married filing jointly.

Key Takeaways

  • Married filing separately is a tax status used by married couples who choose to record their incomes, exemptions, and deductions on separate tax returns.
  • Filing separately may keep a couple in a lower tax bracket and, therefore, keep each individual’s tax liability at bay.
  • If one spouse itemizes deductions, the other must, as well.
  • Although couples might benefit from filing separately, they may not be able to take advantage of certain tax benefits.

Understanding Married Filing Separately

The Internal Revenue Service (IRS) gives taxpayers five different tax filing status options when they submit their annual tax returns: single, married filing jointly, married filing separately, head of household, or qualifying widow(er). Anyone who files as married in either category—filing separately or filing jointly—must be married as of the end of the tax year. So someone who files as married on April 15, 2020, should have been married no later than Dec. 31, 2019.

Using the married filing separately status may be appealing and offer financial advantages to certain couples. Combining their incomes and filing jointly might push them into a higher tax bracket and, therefore, increase their tax bill. Filing separately, on the other hand, may keep a couple’s tax liability at bay.

Although there are financial advantages to filing separately, couples miss out on tax credits meant for couples who file jointly.

When couples file separately, the IRS requires taxpayers to include their spouse’s information on their returns. According to the IRS, if you and your spouse file separate returns and one of you itemizes deductions, the other spouse will have a standard deduction of zero. Therefore, the other spouse should also itemize deductions.

Note that thanks to the Tax Cuts and Jobs Act of 2017, the standard deduction rose substantially in the 2018 tax year. For 2020 taxes filed in April 2021, it climbed again to $12,400 for individuals and $24,800 for married filing jointly. As a result of this change, one spouse must have significant miscellaneous deductions or medical expenses in order for the couple to gain any advantage from filing separately.

Married Filing Separately vs. Married Filing Jointly

Married filing jointly offers the most tax savings, especially when spouses have different income levels. If you use the married filing separately status, you are unable to take advantage of a number of potentially valuable tax breaks. Some important breaks include:

  • Child and Dependent Care Credit. This is a nonrefundable tax credit used by taxpayers to claim unreimbursed childcare expenses. Childcare can include fees paid for babysitters, daycare, summer camps—provided they aren’t overnight—and other care providers for children under the age of 13 or for anyone who cares for dependents of any age who have a different ability.
  • American Opportunity Tax Credit (AOTC). Introduced in 2009, the AOTC requires that couples filing jointly have a modified adjusted gross income (MAGI) of no more than $160,000 to be eligible for a full credit. Couples who make between $160,000 and $180,000, meanwhile, can apply for a partial ATOC. The maximum reward is an annual credit of $2,500 on qualified educational expenses for the first four years a student attends an approved post-secondary institution.
  • Lifetime Learning Credit. Parents can lower their tax bills by claiming the amount spent on tuition on a dollar-for-dollar basis by as much as $2,000. Qualifying tuition includes undergraduate, graduate, or professional degree courses. In the 2019 tax year, the income for couples filing jointly must not exceed $134,000 to take advantage of this credit.

As a couple who files joint tax returns, you can also take deductions for your contributions to a traditional individual retirement account (IRA) and for any expenses related to the adoption of a qualifying child.

Benefits of Married Filing Separately

Tax bills aside, there is one scenario in which married filing separately may be especially wise. If you don’t want to be liable for your spouse’s taxes, and suspect they are hiding income or claiming deductions or credits falsely, filing separately is probably the best option.

Signing a joint return means both spouses are responsible for the accuracy of the return and for any tax liabilities or penalties that may apply. By signing your own return and not a joint one, you are only responsible for the accuracy of your own information and for any tax liability and penalties that may ensue.

Special Considerations

If you live in community property states, which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, you may need to see a tax professional, because the rules about separate incomes can be tricky.