Is it ever appropriate to file taxes separately when married?

Are you and your partner prepared to submit your tax returns together, despite being married? The decision between "married filing jointly" and "married filing separately" can be a test of your relationship, but it ultimately depends on what is best for both of your financial situations. Filing jointly often results in lower taxes as a couple and allows access to certain tax benefits, but there are instances where it is more advantageous to keep your returns separate.

CNBC Select provides a detailed explanation of the benefits and drawbacks of both options, as well as guidance on how to determine which is the best choice for you.

Who can use the "married filing jointly" status?

If you and your partner are legally married or in a common-law marriage recognized in one of the states, you can file a joint return. This applies to couples in Alabama, Colorado, Iowa, Kansas, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas, and the District of Columbia. If you move to a different state, the federal government will still consider you married for tax purposes.

Couples who live apart but aren't separated legally can file jointly too.

If your spouse passed away during the tax year, you can still opt to file jointly.

Who can use the "married filing separately" status?

Filing tax returns separately is an option for any legally married couple, but it may result in missing out on certain tax breaks and higher taxes.

Before deciding to file jointly, it's important to evaluate the potential impact on your tax situation and perform the necessary calculations.

What are the benefits of filing jointly?

Joint filing can help married couples save money on their taxes.

Lower tax rates

Couples filing jointly are taxed at 10% on the first $22,000 of their taxable income, while single filers and married couples filing separately are taxed at 11%. This trend continues for higher income brackets.

If you earned $60,000 and your spouse earned $20,000 in taxable income in 2023, and you filed your taxes jointly on the $80,000 you made, your tax rates would be determined based on your combined income.

• 10% on the first $22,000
• 12% on the remaining $58,000

If you filed jointly, you would owe taxes based on the combined rates. However, if you filed separately, each of you would owe taxes based on the individual rates.

• The percentage rates for the remaining balance are 10% on the first $11,000, 12% on the next $33,724, and 22% on the remaining $15,275.
• On the first $11,000, your spouse would owe 10%, and on the remaining $9,000, they would owe 12%.

Filing separately would place you in a higher tax bracket.

Higher standard deduction

Filing jointly as a married couple results in the highest standard deduction, which is the amount that can be deducted from taxable income without itemizing, according to the IRS's 2023 tax return amounts.

• $27,700 – married filing jointly or qualifying surviving spouse
• $20,800 – head of household
• $13,850 – single or married filing separately

Tax credits

Filing a joint tax return simplifies the process of claiming various tax credits.

• The Earned Income Tax Credit, designed for workers with low to moderate income
• The Child and Dependent Care Credit is a tax credit that helps offset the cost of hiring a caregiver for your child or dependent, allowing you and your spouse to work.
• Qualifying adoption expenses can be reimbursed through adoption credit.
• Qualifying education expenses can be claimed for the American Opportunity Tax Credit and Lifetime Learning Credit, which are available to individuals, spouses, or children attending college.

When it might be best to file separately

Filing separately may result in a lower tax bill for some couples, according to TurboTax.

You or your spouse had medical bills

Filing separately could help you save money in taxes if you have significant out-of-pocket medical expenses. By doing so, you can deduct these costs more easily since you can only start deducting medical expenses that exceed 7.5% of your AGI.

If you have an AGI of $60,000 and file separately, you can only deduct the first $4,500 of your medical expenses. However, if you file jointly with a combined AGI of $120,000, you can start deducting medical expenses once they reach $9,000 (7.5% out of $120,000).

You have student loan payments

If filing separately for income-based student loan repayment plans can lower your AGI, it may result in paying less towards your student debt, which could be financially beneficial as a couple.

You keep your finances separate

Filing separately from your spouse's tax matters can be beneficial in certain situations, such as when your spouse has a significant tax debt, you've experienced financial infidelity, or you're going through a divorce.

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How to file your taxes separately

Filing separately for taxes requires both spouses to follow specific rules. One spouse cannot claim the standard deduction if the other is itemizing. Additionally, if itemizing is chosen, the deductions must be divided between the two spouses.

You can submit paper returns to the IRS, utilize tax software, or collaborate with a tax professional. If you work with an expert, they can assist you in determining whether filing jointly or separately is advantageous. If you choose to file on your own, calculate the costs and compare the two options. It is recommended to evaluate both scenarios to determine which one results in the greatest savings.

Filing taxes with tax software allows you to seek professional advice while still doing your taxes yourself. For example, TurboTax LiveAssisted provides on-demand help from a tax expert and includes a free expert review of your return.

If you select a paid tier with H&R Block, you have the option to connect with a tax professional while filing. However, a review from a tax professional is available as an additional fee.

Bottom line

Filing jointly with your spouse can often result in tax savings, but it's not always the best option. In certain circumstances, filing separately may be more advantageous. To determine which option is best for you, it's important to calculate the costs and benefits of both filing methods. If you're unsure, it may be beneficial to consult with a tax professional.

Why trust CNBC Select?

Our goal at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions when it comes to their finances. Each of our tax guides is the result of thorough reporting by our team of expert writers and editors, who possess extensive knowledge of tax software products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently, without any input from our commercial team or external third parties. We uphold the highest journalistic standards and ethics in everything we do.

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