Most married couples file a joint tax return because it's standard operating procedure. By filing jointly, married couples typically experience greater tax benefits and a higher income threshold before phasing out of certain deductions and credits. But even the IRS urges taxpayers to calculate their taxes jointly and separately if both partners had income in a given year to ensure they pay the lowest amount in taxes.
When should I file as separate?
A major reason to file without your spouse is if one has a much lower adjusted gross income than the other, and has a high amount in itemized deductions. A key example is a spouse who had a lower income and high medical expenses during the year. Medical expenses that exceed 7.5 percent of your adjusted gross income are deductible, so a lower income makes it more likely you'll exceed that limit. You also can benefit by filing separate returns if one spouse has such things as casualty losses or un-reimbursed employee business expenses.
Other scenarios in which this filing method is recommended is if one spouse has tax liens against them, owes unpaid child support, or is being audited by the IRS.
What are the drawbacks of filing a separate return?
You'll lose out on many tax benefits that are available to joint filers. That means you won't be able to claim the educational tax credits and deductions for student loans, tuition and fees; it's unlikely you'll be able to claim the child and dependent care tax credits; you'll face restrictions on your Roth IRA contributions; and your capital loss deduction will be limited to $1,500 rather than $3,000. And if you live in one of the nine community property states, you'll have to split your income 50-50, even if you file separately.
