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Married Filing Separately: How It Works, When To Do It

When you’re married, you naturally tend to do everything together including tax filing. You opt for joint tax filing. But sometimes it’s good to file taxes separately for a few reasons that we will look at in this article.

married filing separately
There are five tax-filing statuses given to all the taxpayers in the United States of America. Married filing separately is one of them.

In this article

It’s always easy to file joint tax returns because it’s more convenient to file one tax return instead of two. Furthermore, filing one tax return doesn’t just save you time, it also results in a lower tax bill. But it’s best to file taxes separately because it may benefit you in many ways. Before we get into that, let’s find out what married filing separately means.

What is married filing separately? 

There are five tax-filing statuses given to all the taxpayers in the United States of America. Married filing separately is one of them. Under this category, married people have the option of filing taxes separately instead of combining them together into one joint tax return. Each partner files their own tax returns and deductions based on their earnings and expenditures. 

How married filing separately works 

If you are married and have been filing taxes jointly, then you can select the option of married filing separately and do your taxes individually. However, there are a few rules you must follow:

  • There are two types of tax deductions taxpayers often claim: standard deduction vs itemized deduction. If you are opting for the former, then your spouse has to opt for the latter. Both of you can’t file the standard deduction or the itemized deduction. The two of you have to decide which they want to file before the tax season.
  • When you are filing taxes separately, there are a few perks you won’t be able to take advantage of. Such as credit card expenses, child and dependent care expenses, education credits, and student loan interest.
  • Don’t confuse separate filing with single filing. People whose relationship status is single file under the “single tax filing”. People who are married but choose to file separately come under “separate filing.” Both of these come under different tax brackets.

How to decide if it’s right for you 

It’s nothing uncommon or unnatural to file for taxes separately when you are married. Many people do that because of the perks this tax status offers. Read the below points to decide if it will be convenient for you:

Student loans

  • The chances of you receiving a reduced monthly bill is more likely when you are registered in any kind of income-based student loan repayment plan. You can file separately if you are enrolled in such student loans to reduce your monthly bill.
  • When you file taxes separately, your expenses and deductions are calculated individually and not as a couple. That will also reduce the money you have to pay on taxes. This is worth filing taxes separately.

Medical expenses 

You can deduct the medical expenses that exceed 7.5% of your AGI (adjusted gross income). When both the partners file this deduction separately, the reimbursement can be high.

Complicated spouses

  • Let’s say your spouse has overdue taxes but you have been very thorough about tax returns. It’s worth choosing the married filing separately status because the IRS won’t steal your refunds because of your spouse’s tax mistakes.
  • If you are on the verge of getting a divorce or if you feel like your spouse isn’t being honest with their tax payments, then it’s best to file separately and avoid any future problems.

If you are thinking about filing taxes separately, you can talk to your partner about this first and find out which will be more beneficial for you. However, if you live in a community property state like Arizona or Texas, then you won’t be able to enjoy the advantages of married filing separately because these states have a law where the earnings of both spouses belong to both of them equally. Couples living in these states will have to report half their income which will annul most of the benefits you get from married filing separately status. 

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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