Each year over 150 million tax returns are filed. For married couples, the overwhelming majority will choose to file joint tax returns. For most households, this makes sense considering the advantageous nature of tax brackets applying to joint returns. For example, the 24% marginal tax bracket applies to taxable income from roughly $200,000 up to $400,000 for joint returns. In contrast, a single filer at the top end of that taxable income range would be in the 35% marginal income tax bracket.
That said, there may be circumstances where married couples may consider filing separate tax returns. Note that married filing separately is a separate filing option. It’s not the same as two individuals merely filing single returns, there are some complicated rules involved. It’s critical to consult with a tax advisor who can conduct analysis to determine if that approach will yield a better outcome for the household.
Breakdown of income tax returns by filing status, IRS 2024
When to consider filing separately?
One spouse has significant out-of-pocket medical expenses
Very few taxpayers deduct medical expenses on their return. First, you must itemize deductions. Considering the significant increase in the standard deduction beginning with the 2018 tax year, most taxpayers claim the standard deduction. More importantly, one cannot deduct medical expenses until the total amount of expenses exceeds 7.5% of adjusted gross income (AGI). This is a very high threshold to meet. For that reason, if one spouse has lower income and a high level of deductible medical expenses there may be an opportunity to claim a deduction. Be aware that if one spouse filing separately itemizes deductions, the other spouse must also itemize deductions.
One spouse is a business owner hoping to claim a QBI deduction
The deduction for Qualified Business Income (QBI) is available to certain business owners who are structured as pass-through entities for tax purposes (most businesses NOT established as C-Corporations). The deduction can be up to 20% of the amount of net business income flowing through to an individual tax return. For professional service-related businesses the deduction is not available once taxable income exceeds $247,300 for singles, $494,600 for married couples filing a joint return (2025 tax figures). In the case where a phase-out may apply, filing separate returns may allow the business owner spouse to avoid the phase-out and benefit from a QBI deduction. Additionally, claiming the QBI deduction does not require a taxpayer to itemize deductions, so both spouses could claim their portion of the standard deduction if that was beneficial based on their circumstances. The rules around the QBI deduction are complicated so consultation with a qualified tax professional is important.
Other considerations for filing separately
- Using this filing status may help one spouse qualify for reduced student loan payments under an Income Driven Repayment (IDR) plan. By filing separately, a borrower’s monthly payment under an IDR plan is based on their own income. When filing jointly, payments are based on both spouses’ income.
- Filing separately may limit legal liability since a spouse filing separately would not generally be liable for the information provided on the tax return by the other spouse on a separate return.
- A downside of filing separately is that certain benefits in the tax code may not be available. For example, married taxpayers filing separately cannot deduct student loan interest or claim tax credits for educational purposes (American Opportunity Tax Credit and Lifetime Learning Tax Credit). These are just a few of the exclusions for this filing status.
- If you live in a community property state, there can be some complications to filing separately, make sure to consult with a local tax advisor.
- Spouses are able to make an IRA contribution even if they do not have any earned income as long as the other spouse has earnings from a job. This is referred to as a spousal IRA contribution. A spouse filing a separate tax return generally is not able to make this type of contribution.
WHAT ARE THE RISKS?
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