Married Filing Separately
Candlefocus EditorDespite the fact that most married couples prefer to file together by using the highly popular and often more-beneficial joint filing status, there are certain situations that warrant filing separately. This may be in instances where one one spouce has significant medical expenses or miscellaneous itemized deductions, or where one partner has more complex tax issues that can be better addressed apart from the other.
Filing a separate return means that the married couple is forfeiting certain tax benefits, credits and deductions that are limited exclusively to those who choose the joint filing status. Examples of these include child-related credits, the Earned Income Tax Credit, certain higher education tax deductions, the premium tax credit, and the retirement saver’s credit.
In some scenarios, filing separately can produce a less favorable outcome, such as when the tax rate is higher, when one partner has large amounts of income, or when the couple wants to take advantage of additional advantages exclusively available to joint filers. Therefore, it’s important that couples assess their situation prior to filing by understanding the implications to their overall financial picture.
The 2019 Tax Cuts and Jobs Act, a federal law that altered the U.S. tax code, has made filing separately more attractive because it eliminates the personal and dependent exemption deductions that would be eliminated when filing jointly instead.
Ultimately, filing separately is a personal decision and it’s not the ideal route for most married couples. It all comes down to individual circumstances and the couple’s financial decisions. Before filing, married couples should consult a financial advisor, certified public accountant, or tax attorney in order to understand the potential risks and benefits associated with either filing status. With the right guidance, this decision can be made easier and you will be able to find the most favorable resolution for your specific situation.