Your married clients have a choice when it comes to filing their taxes. They can either file as:
- Married Filing Jointly (MFJ) – combined together on one 1040 tax return, or
- Married Filing Separately (MFS) – each files his or her own 1040 tax return
Whether they wed on January 1, December 31 or anytime in between, newlyweds (and everyone who is legally married) are eligible for several tax breaks if they file their taxes jointly. Some, however, may choose to file separately for personal or professional reasons.
MFJ vs. MFS
MFJ makes sense for the majority of married taxpayers, but clients with unusual circumstances may want to contrast and compare MFJ vs. MFS to see which will work better for their unique financial situation.
- Only one Form 1040 needs to be filed that reports joint income, expenditure, deductions, and other information
- Filing jointly means the couple is able to take advantage of various benefits, deductions, and tax breaks that may not be available when filing separately.
- Filing separately will likely increase tax exposure and the amount of tax paid, compared to filing jointly.
- Filing separately may make sense if the deductions of each spouse are significantly different.
What is needed to file jointly?
Your clients can file as Married Filing Jointly under the following conditions:
- They must be legally married
- They both agree to file taxes jointly
- They report combined income and deductions for both spouses, even if one spouse did not have income or deductions
The benefits of filing jointly
There are several advantages to filing jointly:
- Access to various tax credits including the Child Tax Credit, Dependent Care Credit, adoption credit, Earned Income Tax Credit, and American Opportunity and Lifetime Learning Education Tax Credits
- Tax-free exclusion, typically of US bond interest and Social Security benefits
- Credit for disabled or elderly status and deductions for some educational expenses, including student loan interest
- Deduction of certain retirement plan contributions and some losses
Pros and cons of filing separately
The IRS wants to encourage married taxpayers to file jointly. As a result, filing separately does have some drawbacks, including:
- Fewer tax considerations and deductions from the IRS
- Loss of access to certain tax credits
- Higher tax rates with more tax due
- Lower retirement plan contribution limits
When should married couples file separately?
There are some limited circumstances where a married taxpayer may choose to file separately, including:
- Separation of tax liability between spouses, so a spouse is only responsible for the accuracy, completeness, and tax due on their own return
- Significant itemized deduction from one spouse that lowers their overall tax exposure
- State-by-state considerations of MFJ vs. MFS
Related reading on MFJ and MFS from TaxSlayer Pro
TaxSlayer Pro can help tax preparation practices of all sizes work with married couples to ensure their net refund is the highest it can be or their balance due is the smallest it can be when filing their taxes each year. Use the convenient MFJ vs MFS Comparison Tool in the software to see which status best fits your client’s situation.
This article was last edited on December 23, 2020. The information is up to date through tax year 2021 (returns filed in 2022).