Marriage and Filing Your Federal Tax Return

Filing a tax return with your spouse usually results in lower taxes. Sometimes a married couple can cut their tax bill by filing separately. The IRS offers married taxpayers two options: filing jointly or filing separately. You and your spouse will want to decide whether the benefits of filing a joint return outweigh the drawbacks.

Filing a Joint Return

Only married taxpayers may file a joint return for a taxable year. Filing jointly enables you to take advantage of many tax credits and benefits that aren't available to couples who file separately.

The main advantages of filing a joint return are:

  • The total tax liability of you and your spouse will usually be lower if you file jointly than if you file separately
  • There's less cost and time to complete one joint return
  • You can receive the largest standard deduction. This deduction reduces the income amount subject to tax if you're not claiming itemized deductions
  • A married person who files a joint return is allowed to contribute to an Individual Retirement Account (IRA) even if that person doesn't work
  • Certain credits and adjustments are generally not available if you're married but choose to file separate returns. However, they're available if you file a joint return with your spouse. Examples include the child and dependent care credit, adoption expense credit, Hope and Lifetime Learning credit and deduction for qualified educational loan interest

The main disadvantages of filing a joint return are:

  • Signing a joint return obligates you to accept full responsibility for the information contained in your tax return as well as for any errors and omissions. This means you may be held individually responsible for the taxes, penalties and interest that result from your joint tax return
  • Your refund can be withheld by the IRS to pay your spouse's financial obligations, such as unpaid child support or student loan default
  • You're less likely to be able to deduct unreimbursed medical expenses. This includes the expenses not covered by your insurance plan
  • You're less likely to be able to deduct your miscellaneous itemized deductions

Filing Separate Returns

If you're married, you and your spouse may choose to each file a separate return. When filing separate tax returns, both spouses must use the same system for claiming deductions. If one spouse itemizes, the other must itemize too. This is true even if a spouse will pay a lower tax bill by taking the standard deduction.

The main advantages of filing separate returns are:

  • You won't face liability for taxes owed by your spouse
  • Your refund won't be withheld by the IRS to repay your spouse's financial obligations
  • You're more likely to be able to deduct unreimbursed medical expenses
  • You're more likely to be able to be able to deduct miscellaneous itemized deductions

You can't deduct unreimbursed medical expenses on your taxes unless they exceed 7.5 percent of your adjusted gross income (AGI). AGI is your income after certain deductions are taken from your gross income. You won't be able to deduct anything for unreimbursed medical expenses if the total expenses fall short of 7.5 percent of your combined adjusted gross income.

If you file separately, the deduction will be based on just one spouse's income. This makes it easier to cross the threshold. If you can prove to the IRS that the bills were paid from your income, you can claim a deduction and include medical expenses for yourself, your spouse and your children.

Miscellaneous itemized deductions must exceed 2 percent of your AGI before you can deduct them. These deductions include job-hunting costs, union dues, tax-preparation fees and unreimbursed business expenses. As is the case with medical expenses, it's easier to qualify if you file separately and base the 2 percent calculation on just one income.

The main disadvantages of filing a separate return are:

  • You'll pay the highest marginal tax rate. This is the rate paid on dollars of income over the top bracket
  • You give up valuable tax breaks, such as education credits, the child care tax credit and interest deductions on student loans
  • It's harder to save for retirement because you won't be able to contribute to a deductible individual retirement account for your nonworking spouse if you file separately
  • Couples who file separately can't roll over a traditional IRA to a Roth IRA. In addition, the income eligibility limits for Roth IRAs are much lower for couples who file separately. This may limit your options for saving for retirement
  • You give up some flexibility in managing tax matters. For example, you and your spouse won't be able balance out the profits and losses on your investments as you can on a joint return
  • There's a loss of certain credits and adjustments that are available to only joint filers

Filing a joint tax return is generally more advantageous than filing separate returns. However, there are times when filing separate returns may work better for you and your spouse. The best approach may be to calculate your tax separately and jointly to determine which method will result in the lower combined tax. If you have questions about your individual tax situation, you may want to consult an experienced tax attorney.

Questions for Your Attorney

  • I am married and my spouse files a Schedule C, should we file a joint tax return or should we each file separately?
  • I am separated but still married to my spouse. Should we file a joint return or should I file as head of household?
  • My ex-spouse is planning to deduct an attorney's fee that she paid but that I incurred for tax planning. Who's allowed to deduct the fee?
  • Are the costs of obtaining advice about the tax consequences of a divorce or separation deductible?

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