Benefits of joint returns
Congress did away with the so-called “marriage penalty,” so regardless of whether you file separately or jointly, your standard deduction works out to be the same size. However, couples who file jointly may qualify for certain tax credits that are not available to couples who file separately. These include the:
- Child and Dependent Care Tax Credit
- American Opportunity and Lifetime Learning Education Tax Credits
- Earned Income Tax Credit
- Exclusion or credit for adoption expenses
In addition, certain credits and deductions are phased out at higher income levels. Typically, those phase-out levels are higher for joint filers. As a result, they’re usually allowed to earn more income and still qualify for certain tax breaks.
Haven't filed your taxes yet? Get closer to your tax refund and file today. We'll search more than 350 tax deductions and credits to find every tax break you qualify for. It’s free to start, and enjoy $10 off TurboTax Deluxe when you file.
Consequences of separate returns
If you and your spouse file separate returns, you’re not only ineligible for the credits and deductions discussed earlier, but you also face limits on other tax benefits. For example:
- Your deduction for a contribution to an IRA may be smaller.
- You can’t take a deduction for the interest paid on a student loan.
- Your deduction for a capital loss is limited to $1,500 each, compared to $3,000 if you file jointly.
When filing separately makes sense
The option to file separately exists for a reason. There are circumstances in which you and your spouse could both benefit by claiming separate deductions on separate incomes.
One of these situations can occur when you (or your spouse) incurs medical expenses that are not covered by insurance. You can claim these out-of-pocket expenses as a medical deduction, but only if they exceed 7.5% of your adjusted gross income (tax year 2019—the threshold increases to 10% of your adjusted gross income beginning in 2020.) It may be difficult to reach this threshold when you and your spouse combine your incomes on a joint return. But if you file separately, you might be able to claim them.
- Example 1—filing separately: You earn $60,000 a year, but have $10,000 in out-of pocket medical expenses. You can deduct the amount in excess of $4,500 ($5,500) because these expenses are greater than the 7.5% threshold ($10,000 – ($60,000 x 7.5%)) = $5,500 itemized deduction).
- Example 2—filing jointly: You and your spouse earn $140,000. You cannot deduct the out-of-pocket expenses, because they make up less than 7.5% of your adjusted gross income ($10,000 ÷ $140,000 = 7.1% of your income).
By claiming the medical deduction, you’ll reduce your taxable income by $10,000. In the 12% tax bracket, you’ll save $1,200 in taxes ($10,000 x .12 tax rate = $1,200). Assuming you aren’t losing out on any other credits and deductions, filing separately in this situation could result in a sizable tax savings.
One important note to consider is that both spouses have to either take the standard deduction or itemize their deductions. You can’t mix and match.
Don't worry about knowing tax rules, with TurboTax Live, you can connect with a real CPA or EA online from the comfort of your own home for unlimited tax advice and a line-by-line review, backed by a 100% accurate expert approved guarantee.
Choosing your filing status
The most reliable way to determine if you save more by filing singly or jointly is to prepare two tax returns—one for each filing status—and then check the balance due (or net refund) for each return. If you use TurboTax for your tax preparation, we’ll automatically do the calculations for you whether you’re married filing jointly or married filing separately, to provide you the biggest tax savings. For more ideas about whether you and your spouse should file taxes jointly or separately, visit TurboTax.com.