Close up of a woman and a man sitting in a cafe, holding hot cups of coffee on the table
In recent years, there has been an increase in the number of taxpayers asking about filing married separately as a tax status. Some of the inquiries are because the status can be confusing, but others have focused on whether there was a benefit to changing states to claim certain pandemic-related benefits. Now that most of those benefits have expired, some taxpayers are wondering if it’s time to go back to filing jointly for marriages. Here’s what you need to know.
Civil status
Your marital status is determined as of the last day of the tax year, December 31, in accordance with state law. If you are married that day, you are married. It doesn’t get more complicated than that.
If you’re married, you generally have two options: married filing jointly (MFJ) or married filing separately (MFS).
MFJ is more popular
Most married couples file a joint return. For tax year 2020, the latest year for which complete data is available from the IRS, 55,322,922 taxpayers filed jointly, which represents about a third of all returns filed. That same year, just over 2% of taxpayers filed a separate married return. By way of comparison, for the 2010 tax year, 37.5% of taxpayers filed a joint return, while 1.8% filed a separate married return.
Differences between MFJ and MFS
In many cases, if you are married and choose to file married separately, you will generally pay more tax. That’s because if you file married separately, you lose the opportunity to claim some tax preference items. For example, you usually can’t take the deduction for interest on student loans, student loans, or the earned income credit if you file MFS.
Many married couples, especially those with two sources of income, perceived that, before the TCJA, they paid more taxes when filing the MFJ. There was some truth to that, as MFJ’s tax rate brackets were not the same as two individual brackets. That changed in 2018: MFJ’s tax brackets are now double those of individual taxpayers. And now, MFS tend to look the same as those for individual contributors.
The pandemic exacerbated interest in filing separately since, for some couples, the math occasionally worked out to provide additional benefits (such as stimulus checks) for couples filing separately.
SFM Choice
But is that still true in 2023? There are a few scenarios where choosing the MFS state makes sense:
- Money. The numbers can be seen better when you present MFS. This is not always true, and depends a lot on the facts and circumstances, but it can happen, for example, when both spouses work. Since our tax system is progressive, the rate increases as dollars increase, filing jointly could land you in a higher tax bracket. But the parentheses don’t tell the whole story: be sure to factor in other tax breaks when doing the math.
- Medical or other expenses. Occasionally, one spouse has significant medical or other expenses, but little income. Since medical expenses are subject to a minimum limit before she can deduct them, joint filers may have a hard time meeting that limit. However, relatively low-income MFS filers can hit the floor much faster. The same is true for casualty losses in a federally declared disaster area (miscellaneous expenses subject to the 2% floor limit have been otherwise eliminated under the TCJA). Remember, however, that your spouse has to itemize if she does, so this only works if she has enough combined deductions.
- Privacy. Your spouse’s tax return will rarely be made public, but if it is, filing separately ensures yours stays private. Who falls into this category? Generally, the wives of politicians. But it can also be the case of company executives or others under public scrutiny.
- Separated lives. Many married couples maintain separate accounts (my husband and I do). It can be for convenience, independence, professional or responsibility reasons, or anything else. Keeping separate accounts or income does not necessarily translate to separate tax returns. However, if you maintain an independent financial life to the point where you don’t care or want to know what’s going on with your spouse’s finances, you shouldn’t file a joint tax return. The IRS expects you to review and understand your tax return before you sign it. If you are not comfortable signing a joint return, consider filing MFS.
- Protection. In the film steel Magnolias, Truvy comments to Clairee, “If you can reach puberty, you can achieve a past.” Many taxpayers these days marry someone with past tax debts, delinquent student loans, you name it. Filing jointly may result in an offset from your refund to pay those debts. Filing a separate return may preserve your right to claim a refund; Yes, you can file a joint return as an injured spouse to achieve the same result, but it’s not foolproof.
- student loans. Income-based repayment plans for student loans are popular these days:according to the Congressional Budget Officethe number of borrowers in income-based plans who obtained direct loans in 2017 was about 45%, up from just 12% in 2010. If you owe student loans and are subject to an income-based plan , you may be able to reduce your monthly payment amount by filing as MFS instead of MFJ since, for most plans, household income is calculated using the borrower’s tax return.
- Laws of the Community of Goods. As an East Coast resident, I don’t claim to fully understand the rules in community property states, but sometimes the way you file in a particular state can play a significant role in determining your marital status for filing purposes. Federal taxes. Ask your tax professional if you have questions.
It’s worth noting that filing married separately requires coordination with your spouse; this is not a decision you make in a bubble. While you include only your own income, deductions, exemptions, and tax credits, you must still include your spouse’s information, including their social security number or taxpayer identification number. You must also choose the same deduction option as your spouse: both must choose to itemize or take the standard deduction.
more to consider
Here are some additional things to keep in mind:
- You can file for MFS status in any year if you are married and meet the criteria. There is no requirement, for example, that they live apart (they can live together) or not get along (they can be madly in love).
- Once you have filed MFJ, you cannot amend your return to MFS, although you may file a superseded return before the due date. However, the opposite works: you can modify the MFS declarations to present them as MFJ.
- If your spouse dies, you can continue to use the married status that works for you for that tax year.
- For most married taxpayers filing jointly, the requirement to file a tax return takes effect when your gross income reaches $25,900 in 2022 (it’s slightly higher for taxpayers age 65 and older). . But the gross income that requires you to file a tax return if it is MFS? Only $5.
Ask questions
Most taxpayers will continue to file MFJ, but that doesn’t mean it’s the right choice for you. And keep in mind that the answer may change from year to year.
Run the numbers, taking into account all the pieces of your financial pictures, to see if it makes sense to you. If you have questions about how filing could affect your student loans or retirement, consult your tax professional before checking a box.
