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.

The alternative to married filing separately is married filing jointly.

Due to the tax law changes that went into effect in 2018, the only time when a couple would gain any advantage from filing separately is if one spouse has significant miscellaneous deductions or medical expenses.

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.
  • In some circumstances, filing separately puts a couple in a lower tax bracket.
  • Although some 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 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 last day of the tax year. So someone who filed taxes for the year 2020 as married must have been married no later than Dec. 31, 2020.

Using the married filing separately status may be appealing and offer financial advantages to certain couples. Combining incomes and filing jointly might push them into a higher tax bracket and thus increase their tax bill.

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, then 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 (TCJA) of 2017, the standard deduction rose substantially in the 2018 tax year. For 2020 taxes filed in 2021, it climbed again to $12,400 for individuals and $24,800 for married couples filing jointly. As a result of this change, one spouse must have significant miscellaneous deductions or medical expenses 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, then 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 anyone who cares for dependents of any age who aren’t physically or mentally able to care for themselves.

The Child and Dependent Care Credit will be more generous in 2021 only, as a result of the American Rescue Plan. The 2021 credit is 50% of eligible expenses up to a limit based on income. That makes the credit worth up to $4,000 for an individual and up to $8,000 for two or more. The law also increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021.

  • 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 full credit. Couples who make $160,000 to $180,000, meanwhile, can apply for a partial AOTC. The maximum reward is an annual credit of $2,500 on qualified educational expenses for the first four years that a student attends an approved post-secondary institution.
  • Lifetime Learning Credit. Parents can lower their tax bills by claiming the amount spent on tuition, and receiving a 20% tax credit on the first $10,000 of qualified education expenses, to save as much as $2,000. Qualifying tuition includes undergraduate, graduate, or professional degree courses. In the 2020 tax year, the income for couples filing jointly must not exceed $138,000 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 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 that they are hiding income or claiming deductions or credits falsely, then filing separately is probably the best option.

Signing a joint return means that 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—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin—then you may need to see a tax professional, because the rules about separate incomes can be tricky.