The Married Filing Separately Filing Status

Considerations for married taxpayers who file separate tax returns

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Married taxpayers have the option of filing joint tax returns or separate returns, but the "married filing separately" filing status provides fewer tax benefits. Why do it then? It depends on your personal considerations and concerns. 

Separation of Tax Liabilities

The clearest benefit in filing separately is that each taxpayer is solely responsible for the accuracy of the return and payment of any taxes that are due.

By contrast, both spouses are what the IRS calls "jointly and severally liable" for the accuracy of a jointly filed return, as well as the resulting taxes.

In other words, you're responsible only for the accuracy of your own tax return if you're audited and you've filed separately, and you're only responsible paying the taxes due on that return. You might prefer this arrangement if your income is $20,000 while your spouse earns six figures. Filing jointly would put you on the hook for paying the portion of taxes resulting from his far superior income. And, of course, if you know or suspect that your spouse is omitting income or overstating deductions, you may not want to get involved. 

The editors of JK Lasser's Your Income Tax advise:

"If you suspect that your spouse is evading taxes and may be liable on a joint return, you may want to file a separate return. By filing separately, you avoid liability for unpaid taxes due on a joint return, plus penalties and interest."

Other Advantages in Filing a Separate Returns

If the combined taxes resulting from two separate tax returns is the same as or very close to the tax that results from a joint return, filing separately doesn't present any real drawback and offers protection against liability even if you don't have any particular reason to worry about that concern at the present time.

 

Some spouses just prefer to keep their finances as separate as possible. If you're living apart or if you're separated but not yet divorced, one of you might qualify for the head of household filing status if you don't file a joint return, which can be particularly advantageous. 

Of course, you must file a separate return if your spouse is unwilling or unable to consent to filing a joint return because both of you must sign the return when you file together.  

How Married Filing Separately Impacts the Tax Return

The married filing separately (MFS) filing status is generally perceived as the least beneficial of all the filing statuses. That's because MFS taxpayers are prohibited from claiming the following tax benefits:

MFS taxpayers also have lower income phase-out ranges for the IRA deduction. Additionally, they must both claim the standard deduction when filing, or they must both itemize their deductions. In other words, one MFS taxpayer is prohibited from claiming the standard deduction if the other spouse is itemizing.

 

Filing status also affects which tax rates are used when calculating a person's federal income tax for the year. The table below shows the tax rates in effect for married persons who file separate returns for 2017.

2017 Ordinary Tax Rates for Married Filing Separately Filing Status
[Tax Rate Schedule Y-2, Internal Revenue Code section 1(d)]

If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
$09,325 $0 × 10% $0 
9,32537,950 9,325 × 15% 932.50 
37,95076,550 37,950 × 25% 5,226.25 
76,550116,675 76,550 × 28% 14,876.25 
116,675208,350 116,675 × 33% 26,111.25 
208,350235,350 208,350 × 35% 56,364.00 
235,350 --  235,350 × 39.6% 65,814.00 

Some Married Persons may be Eligible for Head of Household Status

Married taxpayers may be eligible to file using the head of household filing status rather than separate married returns if their spouses did not live with them during the last six months of the year.

Additionally, your home must have been your child's primary residence for more than half the year or another dependent for the entire year. You must have paid for more than half the cost of maintaining your household. Here's what the IRS has to say on this topic:

"You may be able to choose head of household filing status if you live apart from your spouse, and meet certain tests.... This can apply to you even if you are not divorced or legally separated. If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions" (From the married filing separately section of Publication 501, IRS).

Reporting Community Property

Couples who reside in one of the nine community property states must follow special rules for allocating income and deductions. Community property and income is considered to be jointly owned by both spouses. In other words, if your spouse earns $50,000, half of that is attributable as your income. Accordingly, each spouse generally reports half the total community property income on his or her separate tax return. Similarly, community property deductions are split in half with each spouse reporting half the deduction on his or her separate return. These rules apply even if just one spouse lives in a community property state, and it can obviously affect how much income you're responsible for reporting on a separate married return.

The community property states are California, Arizona, New Mexico, Texas, Louisiana, Nevada, Idaho, Washington and Wisconsin. 

The Time Frame for Deciding to File Jointly or Separately

Married couples can decide to file either jointly or separately when they file an original return for a particular year. Couples can change their minds and switch from two separate returns to a single joint return within three years from the due date of the original return, without extensions. They can change their minds and switch from a joint return to two separate returns only by the April 15 tax deadline. If you want to change your filing status after filing your tax return, you must submit an amended tax return.