When it comes to being married filing jointly or married filing separately, you’re almost always better off married filing jointly (MFJ), as many tax benefits aren’t available if you file separate returns. Ex: The most common credits and deductions are unavailable on separate returns, like: In addition, if you received Social Security or railroad retirement benefits and you lived with your spouse at any time in 2021, you might pay more tax on these benefits if you file separate returns than if you file a joint return. Another reason to be married filing jointly and not
married filing separately could be because of your state. If you live in a community property state, a joint return is more convenient, because you’ll avoid tax rules applying to married filing separately. These states are community property states: Also, if you file jointly, your standard deduction (if you don’t itemize) will be
higher. This usually causes your taxable income and tax to be lower. Married filing separately (MFS) might benefit you if you have to use the Alternative Minimum Tax (AMT) on a joint return. However, this is only true if only one spouse is liable on a separate return.When would I want to be married filing separately over married filing jointly?
Some other reasons people file separate returns are:
- For non-tax reasons, such as maintaining separate finances
- Because the spouse with the lower income can qualify for tax deductions like a medical expense deduction only by filing a separate return
- For state tax reasons. Ex: Filing separate state returns will significantly cut your state tax bill, and your state makes you file using your federal filing status. Make sure that the gains you make on the state side are greater than the cost of separate returns on the federal side.
The best way to figure out whether married filing jointly or married filing 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, both of you can be held responsible for the tax and any interest or penalty due. One spouse might be held responsible for all the tax due — even if the other spouse earned all the income. If either spouse doesn’t agree to file jointly, then both spouses 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 as married filing separately vs married filing jointly, see page 22 of Publication 17 at //www.irs.gov/.
With all this in mind, most married taxpayers file a joint return, both for the savings it provides and for convenience.
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There are a number of reasons why it’s usually better to file as married filing jointly. Still, if you don’t want to file jointly, you might wonder what the disadvantages of married filing separately are.
First, let’s clear the air a bit. People often ask us about the “penalty” for married filing separately. In reality, there’s no tax penalty for the married filing separately tax status. What people thought of as the marriage tax penalty was just a quirk of the tax brackets before 2018. At that time, many double income married couples would owe more tax when filing jointly than they would have owed if they were still single. That’s because the married filing jointly tax rate brackets were not fully double the single filer brackets. So, if each spouse had about the same income, there was a “marriage tax penalty” in the sense that they had to pay more total taxes.
The “marriage penalty tax” since 2018
The Tax Cuts and Jobs Act of 2018 largely ended this so-called marriage tax penalty. It did this by making most of the married filing jointly tax brackets exactly twice the size of the single filer tax brackets. In addition, the married filing separately tax brackets were changed to largely mirror single filer tax brackets.
But if you’re filing a past year’s taxes, you might still wonder how to avoid the marriage “penalty” tax. In short, you can’t. The only way to avoid it would be to file as single, but if you’re married, you can’t do that. And while there’s no penalty for the married filing separately tax status, filing separately usually results in even higher taxes than filing jointly. For example, one of the big disadvantages of married filing separately is that there are many credits that neither spouse can claim when filing separately. To keep things simple and be able to claim all possible tax breaks, most couples file jointly.
When it makes sense to be Married Filing Separately, despite disadvantages
Again, there’s no penalty for the married filing separately tax status. And though there are disadvantages to married filing separately, there are a couple of situations where you still might want to do that instead of filing jointly.
For example, if you’re afraid your spouse is cheating on their return by hiding income or inflating deductions, you might avoid being held responsible for that by filing your own return with the married filing separately status.
Also, many people think they have to file separately to avoid losing a refund to their spouse’s unpaid debt, like defaulted student loan debt or back taxes. While that does work to avoid the debt responsibility, you’ll still be hit by the disadvantages of the married filing separately tax status. If you’re worried about that debt, there’s a better way to avoid having to pay it. Instead of filing separately, you can protect your refund by filing an injured spouse form along with your joint return.