When is it better for a married couple to file their taxes separately rather than jointly?

Each year, couples choose whether to file their taxes jointly or separately. Although filing jointly has many advantages, there are some scenarios where filing separately is considered better. In this article, we will discuss when it makes more sense for a married couple to file their taxes separately rather than jointly.

What does it mean for a married couple to file taxes separately and jointly?

Married filing jointly means the couple files a single return, while married filing separately means they file their own taxes, including individual income, credits and deductions. If a married couple files their taxes jointly, they are both responsible for any tax obligations or penalties and receive a joint refund.

About 3.9 million couples filed their taxes separately in 2021, and more than 54 million couples filed their taxes jointly, according to IRS data.

Who can use married filing “jointly” and “separately”?

Any legally married couple can file taxes jointly even if one spouse has no taxable income or deductions. More importantly, taxpayers are eligible to file jointly based on their marital status on the last day of the tax year.

For example, if you were married on December 31, 2024, you and your spouse can file a joint return for the 2023 tax year. On the other hand, if you are legally divorced on December 31, you cannot file a joint return.

Taxpayers are eligible to file a joint tax return even if the other spouse dies during the tax year and does not remarry. Additionally, married couples who are separated but not legally separated can file a joint return.

Couples living together in a common-law marriage can also report jointly if the country recognizes their marriage.

Likewise, legally married couples can also use the separate filing option. This filing option is not available to unmarried couples. The IRS also considers taxpayers unmarried if a couple separates under a “separate support” statute. In these cases, taxpayers can choose to file either a single or head of household filing.

Benefits of filing a joint return

Filing jointly is a simpler and faster way for married couples to file their taxes. Filing separately generally results in higher tax bills because couples cannot claim certain tax breaks available only to joint filers, such as education deductions and adoption expense deductions.

However, if one spouse makes itemized deductions when filing an individual return, the other spouse cannot claim the standard deduction.

On the other hand, filing your taxes separately is more complicated because it requires two filings. Moreover, in “community property states” (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) filing taxes separately is much more complicated.

Income and deductions in those states are usually split 50-50 between the couple, unless they live apart most of the year. In such cases, each spouse must return his or her individual income plus half of the total “community” income.

When does it make more sense for a married couple to file their taxes separately?

Situations in which it may make more sense for a married couple to file their taxes separately rather than jointly include:

If you have an income-based student loan repayment plan

Monthly payments for income-based student loan repayment plans depend on the taxpayer’s adjusted gross income (AGI). Typically, AGI is higher when a married couple files their taxes jointly.

If you want to lower your monthly payment on these types of student loans, you might consider filing your taxes separately. However, before considering filing separately, it is important to consider other disadvantages of filing separately.

Manage personal matters and finances separately

Some couples, even if they are happily married, prefer to manage their finances separately from their spouse’s. In other words, if each spouse wants to shoulder their own tax obligations, they must file a separate report.

Additionally, if a married couple files a joint return, both spouses are responsible for any mistakes or unpaid taxes on the joint return. On the other hand, if you file separately, each spouse is responsible for his or her own income and tax obligations.

So if you’re not sure your spouse is filing their taxes correctly, filing separately can give you peace of mind from potential tax evasion or fines.

However, in some cases, a spouse who files his or her taxes accurately may be eligible for innocent spouse relief. This relief allows the innocent spouse to avoid paying additional taxes, penalties, and interest due to the other spouse’s incorrect return. An innocent spouse must meet several requirements to qualify for innocent spouse relief.

Maximize your itemized deductions

When you file your taxes, you use the standard deduction or itemize deductions, whichever is higher. The standard deduction for married couples filing jointly in 2023 is $27,700, making it more difficult for couples to claim tax breaks for charitable gifts, medical expenses and other expenses.

On the other hand, the standard deduction limit for separate filers is $13,850, which is easy to exceed. However, if one spouse items each item when filing a joint return, the other spouse may not be able to take the standard deduction, which may increase his or her tax liability.

One of your spouses owes money to the federal government.

If one spouse owes the federal government a significant amount, filing jointly may reduce your total refund amount.

For example, if one spouse is behind on taxes or child support or has failed to pay federal student loans, the Treasury Offset Program can use a joint return to cover that debt. Filing separately can avoid liability for any amounts owed to the federal government by the other spouse.

Which do you like better?

Joint returns are easier to prepare and generally lower your overall income tax bill, but filing separately may be beneficial in certain situations. Therefore, it is important for couples to carefully weigh the pros and cons of filing jointly and filing separately against their unique financial circumstances to determine which filing option is best for them.