Married Filing Separately Explained: How It Works and Its Benefits

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.

The alternative to married filing separately is married filing jointly. Usually, it makes sense financially for married couples to file jointly. However, when one spouse has significant medical expenses or miscellaneous itemized deductions, or when both spouses have about the same amount of income, it might be wiser to file separately.

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.
  • Some couples might benefit from filing separately, especially when one spouse has significant medical expenses or miscellaneous itemized deductions.
  • However, filing separately means potentially not being able to take advantage of certain tax benefits offered exclusively to joint filers.

How It Works

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. In other words, someone who filed taxes for the year 2021 as married must have been married no later than Dec. 31, 2021.

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.

When couples file separately, they must 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.

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

Standard Deduction for Married Filing Separately

As a result of the Tax Cuts and Jobs Act (TCJA) of 2017, the standard deduction rose substantially in the 2018 tax year.

A standard deduction is the portion of income that’s not subject to tax, thereby reducing taxable income. The IRS allows tax filers to take a standard deduction. However, the deduction amount is dependent on your filing status, age, and whether you are disabled or claimed as a dependent on someone else’s tax return.

For the 2021 tax year, the standard deduction for single taxpayers and married couples filing separately is $12,550. For heads of households, the deduction is $18,800, while for married couples filing jointly, it is $25,100.

For the 2022 tax year, the standard deduction for single taxpayers and married couples filing separately is $12,950. For heads of households, the deduction is $19,400, while for married couples filing jointly, it is $25,900.

As a result, one spouse must have significant miscellaneous deductions or medical expenses for the couple to gain any advantage from filing separately.

If you and your spouse both generated taxable income, calculate your tax bill as a joint and separate filer before filing, to determine which of the two will save you more money.

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, such as the following:

Child and Dependent Care Credit

The Child and Dependent Care Credit is a nonrefundable tax credit used by taxpayers to claim unreimbursed childcare expenses. Childcare can include fees paid for babysitters, daycare, summer camps—provided that they aren’t overnight—and other care providers for children under the age of 13 or 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, 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)

The American Opportunity Tax Credit (AOTC) helps offset costs for post-secondary education. It was introduced in 2009 and 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 postsecondary institution.

Lifetime Learning Credit (LLC)

The Lifetime Learning Credit (LLC)allows parents to claim the amount spent on tuition and receive a 20% tax credit on the first $10,000 of qualified education expenses, resulting in savings of up to $2,000 on each tax return. Qualifying tuition includes undergraduate, graduate, or professional degree courses.

There is an income limit to qualify for the LLC. The MAGI limit is $69,000 for 2021 and $80,000 for 2022—or $138,000 and $160,000, respectively, for married couples filing jointly.

A couple who files a separate tax return can also take deductions for their contributions to a traditional individual retirement account (IRA), but the income limits for taking them as a deduction if they or their spouse has a retirement plan at work are much lower than for those who file jointly. The maximum contribution permitted in both years is $6,000 ($7,000 for those aged 50 and over). Any expenses related to the adoption of a qualifying child can be taken if couples file jointly, but probably not if they file separately (check with a tax expert). The maximum credit allowed for adoptions is the total amount of qualified adoption expenses up to $14,440 for 2021 and $14,890 for 2022.

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.

State Rules Vary

If you live in community property states—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.

In most cases, it makes sense for married couples to file jointly, especially since the Tax Cuts and Jobs Act (TCJA) of 2017 was passed. However, there are exceptions, including when one spouse has significant miscellaneous deductions or medical expenses.

Do You Need Your Spouse’s Income for Married Filing Separately?

It’s not necessary for married couples to declare their spouse’s income when filing separately—unless they live in a community property state.

Can You File Separately After Filing Jointly?

Yes, married couples are permitted to file jointly one year and separately the next year.

Article Sources
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  1. Internal Revenue Service. “The Hows of Taxes: Module 5: Filing Status.”

  2. Internal Revenue Service. “Publication 504, Divorced or Separated Individuals."

  3. Internal Revenue Service. “Other Deduction Questions.”

  4. Internal Revenue Service. “Be Tax Ready — Understanding Tax Reform Changes Affecting Individuals and Families.”

  5. Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2021.”

  6. Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2022.”

  7. Internal Revenue Service. “Child and Dependent Care Credit FAQs: Am I Eligible to Claim the Credit?

  8. Internal Revenue Service. “Education Credits—AOTC and LTC."

  9. Internal Revenue Service. “Topic No. 602 Child and Dependent Care Credit.”

  10. Internal Revenue Service. “Looking Ahead: How the American Rescue Plan Affects 2021 Taxes, Part 1.”

  11. Internal Revenue Service. “American Opportunity Tax Credit.”

  12. Internal Revenue Service. “Lifetime Learning Credit.”

  13. Internal Revenue Service. "IRA Deduction Limits." Click through to read 2021 and 2022 limits, depending on whether you or your spouse has retirement plan at work.

  14. Internal Revenue Service. "Topic No. 607: Adoption Credit and Adoption Assistance Programs."

  15. Internal Revenue Service. “Publication 555, Community Property: Married Individuals.”

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