One of the biggest benefits to marriage—besides getting to spend the rest of your life with the person you love the most—is being able to file a joint tax return. Unless, that is, your income situation makes it more beneficial to file separately. But there’s good news—married couples don’t have to file together. If you’ve been holding off on popping the question because of its implications for your tax return, or if filing a joint return has been a burden and not a benefit, then read on to see how to file separate returns for married couples.
Advantages of Joint Filing
Before we dig into filing separately, let’s look at some of the advantages a married couple can enjoy by filing a joint tax return. First and foremost: joint filers are allowed one of the largest standard deductions there is for private citizens. On top of that, you’re more likely to qualify for the following tax credits:
- Earned Income Tax Credit
- American Opportunity Tax Credit
- Lifetime Learning Tax Credit
- Credits around adoption expenses
- Child and Dependent Care Tax Credit
Many of these credits grant a higher income threshold for joint filers, making them easier to qualify for. This can be especially advantageous for couples who have a wide gap in their individual income—perhaps one spouse earns too much to qualify for a credit individually, but the couple’s combined income still comes in under the joint filing threshold.
Advantages to Filing Separately
Most couples will want to file together, but not all. The biggest advantage to filing separately is that it lowers your adjusted gross income, which can increase the amount you can deduct in certain cases.
For example, If one partner in a marriage has spent a large amount on out-of-pocket medical expenses, it might make more sense to file separately. The IRS only allows you to deduct medical expenses above a certain percentage of your adjusted gross income (10% in 2019). Since filing separately will give you a lower adjusted gross income, it will increase the amount you can claim over your percentage threshold.
There are other deductions that operate in a similar fashion. The best way to tell if filing separately is right for you is to consult a qualified tax professional who can crunch the numbers both ways and find what saves the most money for you.
Drawbacks of Filing Separately
As with all things, there are some potentially negative considerations to be made when thinking of filing separately. Individual filers may face a higher tax rate, or be in a higher bracket. You may receive fewer considerations. And, as mentioned at the start of this article, the individual standard deduction is far less than that offered to joint filers—50% less in 2018, for example.
Filing a separate return from your spouse will also automatically disqualify you from some of the tax deductions and credits we listed earlier.Your deduction for IRA contributions will also be smaller, and you won’t be able to deduct student loan interest.
All that being said, it could still benefit you to file a separate return instead of a joint return. There’s just no easy way to know without sitting down to fill out both types of returns and see what gets you the biggest break—and that’s the sort of time-consuming labor best left to an accountant.