Filing Joint vs Separate

We frequently receive the question from married couples about whether they should file Joint or Separate on their taxes. So, what's the best filing status for you?

More often than not, it makes sense for married couples to file Joint, instead of filing Separate. When you file separately, your tax rate is higher and you lose the ability to claim certain benefits such as education benefits, earned income credits, child and dependent care credits (in most cases), and several others.

However, there are some rare circumstances when filing separate can be advantageous. Here is a list of some instances when you might file separately.

• One spouse has high medical expenses or high unreimbursed employee expenses. In this case it may make sense to file separately since the IRS only allows you to deduct the amount of these expenses that exceed a certain threshold (as of 2019, these figures are 10% for medical and 2% for employee expenses, if deductible in your state). So if filing jointly creates a high income threshold to exceed, it may make sense to file separate.
• One spouse has tax issues with the IRS. This situation may be a time to file separately so the other spouse's refund cannot be seized to pay off IRS debts, or so the other spouse is protected from inaccurate tax information reporting (although there are ways to still achieve this goal while filing jointly).
• Spouses handle money separately. There are times when spouses keep their finances entirely separate and want taxes to be no different, regardless if it means getting less "as a family" from the IRS.
• One spouse has student loans. This situation may make sense to have a separately filed tax return if it results in possibly getting lower student loan payments. You'd want to check with your student loan providers to get more info on this, as it varies for each specific lender.

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The above list is not all-inclusive as there are other rare situations when filing separately can make sense.

As always, feel free to contact us with your tax questions... we're happy to help!