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For Newlyweds, Arguments For and Against Filing Taxes Jointly

Filing separately doesn't help when it's time to balance the books, either. Couples filing jointly can deduct $3,000 in capital losses against ordinary income. Those filing separately, however, can deduct only $1,500 in losses and can't use one spouse's losses to offset another's gains.

It's a big reason why only 4.5% of married couples filed separately in 2009, the last year for which data were available. Married couples filing separately made up less than 2% of all returns filed that year, but that didn't necessarily mean they were making the wrong call.

"MFS tax rates are higher than single and some of the benefits otherwise available, like deducting interest on student loans and the education tax credit, are reduced or eliminated," says Mickey Cargile, CFP, managing partner at Cargile Investments. "However, if one spouse has high itemized deductions, like medical expenses, it may be better to file MFS."

For argument's sake, let's say one spouse has an adjusted gross income of $100,000 per year and the other's comes out to $25,000 per year. Let's also posit that the second person racked up $5,000 in unreimbursed medical bills that same year. Since medical expenses at and above 7.5% of adjusted gross income are deductible, a couple would be better off filing separately and making that $5,000 a solid 20% of the lower earner's income instead of just 4% of the couple's combined income.

Of course if your spouse is notoriously bad with money or is already souring on the relationship somehow, filing separately may seem a lot more appealing. Anthony Criscuolo, CFP for Palisades Hudson, says a "risky spouse" can make joint filing a dodgy proposition if they like to take aggressive positions on a tax return or take their chances with a Schedule C itemized return for their small business.
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