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When "married filing separately" makes financial sense

  • 6-min read

Did you know that married couples can go their separate ways on Tax Day? In rare cases, couples can save when they file separate tax returns.

Married coupling using a laptop to review their tax filings
FG Trade / Getty Images

A good marriage is all about doing stuff together. But going it alone when filing Form 1040 can sometimes make financial sense. And that begs the question: Can I file married filing separately? The answer is yes. 

In limited cases, a couple can trim their combined tax bill by going the married filing separately route instead of the more common married filing jointly. And who doesn’t want to save a little dough, right? So, it’s worth answering the following questions: What is married filing separately? How does filing separately work? 

What’s the difference between married filing jointly and married filing separately? 

Married couples have two filing options: married filing jointly (which is by far the most common and normally results in a lower tax bill) or married filing separately. A joint return is a single tax return that includes the couple’s combined income, tax credits, exemptions, and deductions. In contrast, when married couples file separately, each spouse submits their own return and only claims their own income, deductions, and their share of any joint income or deductions. (How to split income for married filing separately? Joint income, such as investment accounts, is split 50/50, unless you live in a community property state, which has different rules.) 

Taxpayers can choose either option. If saving on taxes is your goal (and why on earth wouldn’t it be?), run the numbers using both methods. The reason: Your choice will determine the size of your standard deduction, whether you’re eligible for tax credits and other tax breaks, and what you eventually will owe Uncle Sam. 

If you’re keeping score, married filing jointly is most often the way to go. Typically, a married couple will pay about the same or a little more in taxes if they file separately, according to Mark Steber, chief tax information officer at Jackson Hewitt, a tax preparation service. Why? It’s all about the math—and less financially friendly married filing separately rules. “The tax code is structured against married filing separately,” Steber said. 

When should you consider filing separately from your spouse? 

But never say never. There are instances where you can come out ahead with married filing separately. Why leave money on the table? 

There are two no-brainer reasons why you should opt to file separately. The first is a dollars-and-cents comparison: “If the tax return results in less tax owed than if you were to file jointly,” Steber said. And secondly, if you don’t trust your spouse (and think he or she is a tax cheat), you can file separate returns. That way you’re only responsible for your own return and tax bill. And if your marriage is on the rocks and you’re legally separated or in the process of divorce, it makes sense to file separately and take a big step towards financial autonomy. Going it solo may also pay off if your spouse is behind on student loan payments or in default as the IRS can seize tax refunds to pay for late payments.

In general, it could make sense to use the separate filing status if you have no dependents or educational expenses, as you won’t miss out on tax credits and deductions only available to couples that file joint returns.

Couples applying for student loans might also increase the federal aid they get by filing separately, as the amount of aid is based on reported income. 

One big reason to file separately is if the lower-income spouse has substantial medical expenses and can itemize their medical expenses, assuming the deduction is larger than the standard deduction of married filing jointly. Also, couples who don’t live together and collect Social Security could use this filing status to have their benefits taxed at a lower rate. 

Example of how MFS can save you on your taxes 

Filing separately can pay off if you or your spouse has a large amount of out-of-pocket medical expenses. The catch? The IRS only lets you deduct these costs that exceed 7.5% of your adjusted gross income. It may be easier to reach the 7.5% threshold if you only claim one income, according to TurboTax

For example, say you had $15,000 in medical expenses and earned $45,000. That puts you over the 7.5% threshold ($15,000 / $45,000 = 33.3% of your AGI). But if you make a boatload of money as a couple, you won’t get the write-off. If your combined family income were $225,000, it would disqualify you from claiming the deduction because it would total only 6.7% of your taxable income. 

Still, it’s a longshot to get the numbers to work in your favor. But moonshots do come in sometimes. 

What are the disadvantages of married filing separately? 

Tax rates tend to be higher for separate filers, due to lower income thresholds for tax brackets. (The taxable income in the 22% tax bracket for joint filers for the 2022 tax year ranges from $83,551 to $178,150, compared to $41,776 to $89,075 for married filing separately.) That’s a bummer because married filing separately jumps up to the 24% bracket more quickly than joint filers. 

There are other headaches. The standard deduction—or the portion of your income not subject to taxes—is smaller for married filing separately. (The 2022 standard deduction for married filing separately is $12,950 versus $25,900 for joint filers.) 

Filing separately also eliminates potential money-saving tax credits. Can married filing separately claim the Earned Income Tax Credit? Nope. Nor can you claim the Child and Dependent Care credit, unless you’re legally separated or living apart. You’ll also need to meet certain requirements to get a child adoption credit. You also lose the ability to take advantage of tax deductions on student loan interest. The same goes for traditional IRA contributions if your adjusted gross income is $10,000 or more. People in retirement might wonder: is social security taxable for married filing separately? Unfortunately, yes. Up to 85% of your social security benefits may be taxable if you lived with your spouse. 

“It’s very rare that both taxpayers would get a larger refund using married filing separately status,” Steber said. 

The bottom-line: run the numbers 

You don’t have to dump your spouse to go the married filing separately route. Sure, the odds of saving on taxes this way are akin to winning the lottery. But you won’t know for sure unless you run the numbers doing your return both ways. Your goal is simple: File your taxes in a way that gets you a larger refund or lower tax bill.