Question

What is the benefit of married filing jointly vs. married filing separately?

Answer

Not sure if you should file jointly or separately as a married couple? You’re almost always better off married filing jointly (MFJ). Usually, filing a joint return lowers your tax liability more than filing separate returns. This is because many tax benefits aren’t available if you file separate returns. Ex: You can’t claim most credits if you file separately. 

Is It Better to File Jointly or Separately? What to Consider

As already mentioned, many tax benefits aren’t available if you file separate returns. If you usually use some of these benefits, that might help you decide if it’s better to file jointly vs. separately. 

Here are some of the most common credits and deductions that are usually unavailable to married couples who file separately: 

  • Standard deduction (if your spouse itemizes deductions)
  • Earned Income Credit (EIC)
  • Child and dependent care credit
  • Education benefits, like the American Opportunity Credit and Lifetime Learning Credit
  • Premium tax credit (unless one of you is a victim of domestic abuse)
  • Student loan interest deductions
  • Adoption credit or exclusion
  • Interest income from U.S. Savings Bonds you use for higher education expenses

If a married couple files separate returns, the phase-out levels for certain credits and deductions are half the amount of the joint status. So, you might be less likely to qualify for credits and deductions like these:

  • Child tax credit
  • Retirement savings contribution credit
  • Deductions for personal exemptions (since each spouse claims an individual exemption)
  • Exemptions and itemized deductions with phase-out limitations
  • Capital loss deduction
  • IRA deductible contributions
  • Rental activity losses

Also, when asking if it’s better to file jointly or separately, you should know that your Social Security benefits can be taxed up to 85% if you lived with your spouse at any time in the year and you try to file separately.

However, there are reasons some couples choose to file separate returns, such as:

  • Non-tax reasons, like maintaining separate finances
  • Lower income tax breaks — The spouse with the lower income might qualify for tax breaks (like a medical expense deduction) they only qualify for when filing separately.
  • State tax reasons
  • Alternative Minimum Tax (AMT) liability on a joint return. However, this is only true if only one spouse is liable on a separate return.

Filing Taxes Jointly or Separately: How to Decide

The best way to figure out whether married filing jointly or 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 vs. separately, be aware that both of you can be held responsible for the tax and any interest or penalty due. You might be held responsible for all the tax due even if your spouse earned all the income. If either of you doesn’t agree to file jointly, then both you and your spouse 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 married filing separately, see Publication 17.

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