The IRS gives married couples two options when it comes to filing their taxes. 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 married taxpayers, however, will choose to file separately for personal or professional reasons.
It is recommended that a couple discuss these options prior to starting their taxes and then have their tax preparer use both options to see which would be more beneficial.
Married Filing Jointly Vs. Married Filing Separately — Which is Best?
Married taxpayers have the choice to file their taxes either jointly(combined together on one 1040 tax return — Married Filing Jointly — MFJ) or separately (each files his or her own 1040 tax return — Married FilingSeparately — MFS). In many cases, married taxpayers will see the most financial benefits from filing jointly, although there may be circumstances where filing separately would be appropriate.
ASummary of Married Filing Jointly vs. Married Filing Separately
MFJ makes sense for the majority of married taxpayers:
- 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.
- Married taxpayers with unusual circumstances should contrast and compare MFJ vs. MFS to see which will work better for their unique financial situation.
What is Needed to File Jointly?
Taxpayers can choose to file as “Married Filing Jointly” under the following conditions:
- The taxpayers need to be legally married.
- They both agree to file taxes jointly.
- They report combined income and deductions for both spouses.
- They report combined income, even if a spouse did not have income or deductions.
What Married Taxpayers Benefit From if Filing Jointly
There are several advantages to filing jointly:
- Access to various tax credits including child, dependent care, adoption, earned income tax credits, 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.
Issues and Benefits 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 a Married Taxpayer Might Choose to 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 ofMFJ vs. MFS.
Related Reading on MFJ and MFS from TaxSlayer Pro
- Filing Status
- Quick MFJ vs MFS Comparison Module
- Amending Filing Status from MFJ to MFS (or MFS to MFJ)
- Married Filing Separate Allocation – Form 8958
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.