- Married couples have to file taxes jointly or separately, and one filing status often results in greater tax savings.
- Generally, it’s better to file jointly when you’re married — you’ll get double the standard deduction and have full access to valuable deductions and credits to lower your tax liability.
- In a few cases, it can make more sense to file separately, such as when you have excessive medical expenses or use an income-driven repayment plan for federal student loans.
- This post has been reviewed for accuracy by Thomas C. Corley, CPA.
- See Business Insider’s picks for the best tax software »
Most people can agree on one thing when it comes to money: They hate losing it.
For married couples, one significant way to save on taxes is determining whether you and your spouse should file your tax returns jointly or separately.
In the vast majority of cases, married couples save money by filing jointly — especially if one spouse works and the other doesn’t, one spouse out-earns the other significantly, or you have children. Still, there are special circumstances where it makes sense to file separately. The right filing status for you will depend on your expenses and income.
Note that if you got married on or before December 31, you’re considered married for the entire year for tax purposes.
Should I file taxes jointly or separately with my spouse?
Every couple’s situation is different, but in general there are a few major benefits to married filing jointly (MFJ):
- Access to valuable tax deductions and credits, including the earned income tax credit, child and dependent care credit, student-loan interest deduction, the American Opportunity credit, the Lifetime Learning credit, the maximum state and local tax (SALT) deduction, and the full IRA deduction (up to the income limits).
- If one spouse makes more than the other, combining incomes could bring the higher earner into a lower tax bracket, since the tax rate ranges for married filers are different than single filers.
- Married joint filers get a standard deduction of $24,400, reducing their taxable income by the maximum amount.
- Married joint filers get a maximum capital loss deduction of $3,000.
Here are some key points to consider about married filing separately (MFS):
- Excluded from earned income credit, dependent care credit, the American Opportunity tax credit, the Lifetime Learning tax credit, the student-loan interest deduction, and the Adoption credit, and unable to qualify for a full IRA contribution deduction.
- If one spouses itemizes their deductions, the other must, too.
- State and local income tax (SALT) deductions are limited to a total of $5,000, half the amount available to joint filers.
- The income threshold for the highest tax rate comes much sooner for MFS than for MFJ and single filers. Once taxable income reaches $306,175 for MFS, the 37% tax rate kicks in, compared to $612,350 for MFJ and $510,300 for single filers.
When to consider filing taxes separately
Filing separately does save some couples money. One of the primary reasons couples choose to file separately is if a spouse claims itemized deductions that would exceed the amount of their standard deduction, like business expenses, charitable donations, or medical bills.
Your medical expenses are very high
For the 2019 tax year, filers can begin to deduct medical expenses once the total amount exceeds 7.5% of their adjusted gross income. When spouses’ incomes are combined, the threshold can be exceptionally hard to meet. Further, it’s usually not worth doing unless the deductible amount is higher than the standard deduction ($24,400) for married couples filing jointly.
Filing separately would allow both spouses to begin deducting qualified medical expenses after they exceed 7.5% of their own individual AGI. Remember, though, that itemizing deductions will disable either spouse from claiming their separate standard deduction of $12,200 (half of the amount you would get filing jointly). If one spouse itemizes, the other must, too.
A spouse is on an income-driven repayment plan for student loans
Another reason to consider file separately would be if one spouse (or both) uses an income-driven repayment plan for federal student loans. When you file jointly, your combined income is recognized as the borrower’s income, since the AGI listed on your annual tax return is the figure used to represent income. A higher combined AGI could significantly drive up monthly payments for the individual borrower.
You want to protect your own finances or need to follow state law
Lastly, not to plant the seeds of doubt, but filing separately might be smart if you suspect your spouse may be committing tax fraud, is behind on tax payments, or owes child support, because you’ll be protected from shady behavior and your refund (if you’re owed one) won’t be held up by the IRS.
Also keep in mind that if you and your spouse work or live in different states, your state may require you to file separately in your state and jointly for your federal returns to ensure you won’t be taxed twice (in your state and your spouse’s state) on the same income. The exception to this rule is if you live in a community property state where all marital assets are considered joint property.
If you’re unsure whether filing jointly or separately is right for you and your spouse, consider preparing a tax return online through a service like H&R Block or TurboTax for both scenarios to see which one would result in the lowest tax liability.
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