Encore Partners
  • About Us
    • Who We Are
    • Client Testimonials
    • Careers
  • Services
  • Insight
  • Contact
  • Client Portal
  • Client Payments
  • Suralink
  • Menu Menu

Married couples filing separate tax returns: Why would they do it?

February 18, 2022/in News, Tax Tips - Individual/by Betty Kim

If you’re married, you may wonder whether you should file joint or separate tax returns. The answer depends on your individual tax situation.

In general, it depends on which filing status results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS assesses, plus interest and most penalties. That means that the IRS can come after either of you to collect the full amount.

Although there are “innocent spouse” provisions in the law that may offer relief, they have limitations. Therefore, even if a joint return results in less tax, you may want to file separately if you want to only be responsible for your own tax.

In most cases, filing jointly offers the most tax savings, especially when the spouses have different income levels. Combining two incomes can bring some of it out of a higher tax bracket. For example, if one spouse has $75,000 of taxable income and the other has just $15,000, filing jointly instead of separately can save $2,499 on their 2021 taxes, when they file this year.

Filing separately doesn’t mean you go back to using the “single” rates that applied before you were married. Instead, each spouse must use “married filing separately” rates. They’re less favorable than the single rates.

However, there are cases when people save tax by filing separately. For example:

One spouse has significant medical expenses. Medical expenses are deductible only to the extent they exceed 7.5% of adjusted gross income (AGI). If a medical expense deduction is claimed on a spouse’s separate return, that spouse’s lower separate AGI, as compared to the higher joint AGI, can result in larger total deductions.

Some tax breaks are only available on a joint return. The child and dependent care credit, adoption expense credit, American Opportunity tax credit and Lifetime Learning credit are only available to married couples on joint returns. And you can’t take the credit for the elderly or the disabled if you file separately unless you and your spouse lived apart for the entire year. You also may not be able to deduct IRA contributions if you or your spouse were covered by an employer retirement plan and you file separate returns. And you can’t exclude adoption assistance payments or interest income from series EE or Series I savings bonds used for higher education expenses.

Social Security benefits may be taxed more. Benefits are tax-free if your “provisional income” (AGI with certain modifications plus half of your Social Security benefits) doesn’t exceed a “base amount.” The base amount is $32,000 on a joint return, but zero on separate returns (or $25,000 if the spouses didn’t live together for the whole year).

Circumstances matter

The decision you make on filing your federal tax return may affect your state or local income tax bill, so the total tax impact should be compared. There’s often no simple answer to whether a couple should file separate returns. A number of factors must be examined. We can look at your tax bill jointly and separately. Contact us to prepare your return or if you have any questions.

Tags: individual, Married Couples
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
  • Share by Mail
https://encorepartnersllp.com/wp-content/uploads/2022/02/MFJ-MFS.png 292 560 Betty Kim https://encorepartnersllp.com/wp-content/uploads/2021/02/Logo_hex2-1030x266.png Betty Kim2022-02-18 09:00:002022-02-28 15:13:52Married couples filing separate tax returns: Why would they do it?
You might also like
Filing tips Encore Partners LLP What tax records can you throw away?
1099 vs w2 1099-NEC Replacing Form 1099-MISC
Business Tax restructuring Tax Saving Opportunity – Excess Business Losses
Year-end tax planning ideas for individuals
Encore Website redesign Business website costs: How to handle them for tax purposes
Tax Tips Heavy SUV tax deductions

Newsletter Signup

    Connect With Us

    Categories

    • Encore Culture
    • Events
    • News
    • Tax Tips – Business
    • Tax Tips – Individual

    Search

    Recent Posts

    • Important Update: IRS Focus on High-Net-Worth Individuals and Pass-ThroughsSeptember 29, 2023 - 9:00 am
    • Update on depreciating business assetsSeptember 15, 2023 - 9:00 am
    • Important IRS Enforcement Update – Let’s stay compliant together!September 12, 2023 - 9:51 am
    • Proactive Tax Planning & Organized Accounting for Strategic Decision MakingJuly 14, 2023 - 9:04 am

    Get the latest tax and finance news

    right in your inbox

    2 + 2 = ?

    Encore Partners Logo

    Main Office
    4350 Executive Drive
    Suite 260
    San Diego, CA 92121
    858.549.7100

    Beverly Hills Office
    9595 Wilshire Blvd,
    Suite 900
    Beverly Hills, CA 90212
    310.300.8480

    © Encore Partners LLP 2021 – all rights reserved

    site design by digitalstoryteller.io

    © Encore Partners LLP 2021 – all rights reserved
    site design by digitalstoryteller.io

    Keeping meticulous records is the key to tax deductions and painless IRS au...Making withdrawals from your closely held corporation that aren’t taxed as... Scroll to top

    This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

    Accept All CookiesRefuse Cookies

    Cookie and Privacy Settings



    How we use cookies

    We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

    Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

    Essential Website Cookies

    These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

    Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

    We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

    We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

    Google Analytics Cookies

    These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

    If you do not want that we track your visit to our site you can disable tracking in your browser here:

    Other external services

    We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

    Google Webfont Settings:

    Google Map Settings:

    Google reCaptcha Settings:

    Vimeo and Youtube video embeds:

    Other cookies

    The following cookies are also needed - You can choose if you want to allow them:

    Privacy Policy

    You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

    Accept settingsHide notification only