Over the past few years, there has been an uptick in the number of taxpayers asking about married filing separately as a tax status. Some of the inquiries are because the status can be confusing, but others have focused on whether there was a benefit to switching status to claim certain pandemic-related benefits. Now that most of those benefits have expired, some taxpayers wonder if it’s time to switch back to married filing jointly. Here’s what you need to know.
Marital Status
Your marital status is determined as of the last day of the tax year—December 31—according to state law. If you’re married on that day, you’re married. It’s not more complicated than that.
If you are married, you generally have two choices: married filing jointly (MFJ) or married filing separately (MFS).
MFJ Is More Popular
Most married couples file jointly. For the tax year 2020, the last year for which complete data is available from IRS, 55,322,922 taxpayers filed jointly, representing about one-third of all returns filed. That same year, just over 2% of taxpayers filed married filing separately. For comparison, for the tax year 2010, 37.5% of taxpayers filed jointly, while 1.8% filed married filing separately.
MFJ and MFS Differences
In many cases, if you are married and choose to file as married filing separately, you will usually pay more tax. That’s because if you file as married filing separately, you lose the opportunity to claim some tax preference items. For example, you typically cannot take the student loan interest deduction, education credits, or the earned income credit if you file MFS.
Many married couples—especially those with two income earners—perceived that, pre-TCJA, they were paying more tax by filing MFJ. There was a little bit of truth to that since the MFJ tax rate brackets weren’t the same as two single brackets. That changed in 2018—now, the MFJ tax brackets are twice those for single filers. And, now, MFS tend to look the same as those for single filers.
The pandemic exacerbated interest in filing separately since, for some couples, the math occasionally worked out to provide additional benefits (like stimulus checks) for couples who file separately.
Electing MFS
But does that still hold true in 2023? There are a few scenarios where electing MFS status makes sense:
- Money. The numbers may look better when you file MFS. That’s not always true, and it’s very facts and circumstances dependent, but it can happen, for example, when both spouses work. Since our tax system is progressive—the rate increases as the dollars increase, filing jointly could move you into a higher tax bracket. But brackets don’t tell the whole story—be sure to factor in other tax breaks when doing the math.
- Medical or Other Expenses. Occasionally one spouse has significant medical or other expenses but little income. Since medical expenses are subject to a floor before you can deduct them, joint filers may have difficulty meeting that threshold. However, taxpayers filing MFS with a relatively low income can hit the floor much more quickly. Ditto for casualty losses in a federally declared disaster area (miscellaneous expenses subject to the 2% floor have otherwise been eliminated under the TCJA). Remember, though, that your spouse has to itemize if you do, so this only works if you have enough combined deductions.
- Privacy. Your spouse’s tax return will rarely be made public, but if it is, filing separately ensures that yours stay private. Who falls into this category? Generally, the spouses of politicians. But it can also be the case for executives of companies or others under public scrutiny.
- Separate Lives. Many married couples maintain separate accounts (my husband and I do). It may be for convenience, independence, professional or liability reasons, or something else altogether. Keeping accounts or income separate doesn’t necessarily translate into separate tax returns. However, if you maintain independent financial lives to the point where you don’t care/want to know what’s going on with your spouse’s finances, you should not file a joint tax return. The IRS expects you to review and understand your tax return before you sign it. If you don’t have a level of comfort in signing a joint return, consider filing MFS.
- Protection. In the movie Steel Magnolias, Truvy remarks to Clairee, “If you can achieve puberty, you can achieve a past.” Many taxpayers these days marry someone with a past—past tax debts, defaulted student loans, you name it. Filing jointly may result in an offset of your refund to pay back those debts. Filing separately may preserve your right to claim a refund—yes, you can file as an injured spouse on a joint return to achieve the same result, but it’s not foolproof.
- Student Loans. Income-based repayment plans for student loans are popular these days—according to the Congressional Budget Office, the number of borrowers in income-driven plans who had taken out direct loans in 2017 was approximately 45%, an increase from just 12% in 2010. If you owe student loans and are subject to an income-based plan, you may be able to lower your monthly repayment amount by filing as MFS rather than MFJ since, for most plans, household income is calculated using the borrower’s tax return.
- Community Property Laws. As an east-coaster, I don’t profess to completely understand rules in community property states, but sometimes how you file in a particular state can play a big part in determining your filing status for federal tax purposes. Ask your tax professional if you have questions.
It’s worth noting that filing married separately does require coordination with your spouse—this isn’t a decision that you make in a bubble. While you include only your own income, deductions, exemptions, and tax credits, you still have to include your spouse’s information, including your Social Security Number or Taxpayer ID. You also have to elect the same deduction option as your spouse—you must both opt to itemize or take the standard deduction.
More To Consider
Here are some additional things to keep in mind:
- You can file MFS status in any year if you’re married and otherwise meet the criteria. There’s no requirement, for example, that you live apart (you can absolutely live together) or don’t get along (you can be madly in love).
- Once you’ve filed MFJ, you cannot amend your return to MFS, though you can file a superseded return before the deadline. The opposite, however, does work: you can amend MFS returns to file as MFJ.
- If your spouse passes away, you can continue to use whichever married status works for you for that tax year.
- For most married taxpayers filing jointly, the requirement to file a tax return kicks in when your gross income hits $25,900 in 2022 (it’s slightly higher for taxpayers 65 or older). But the gross income to require you to file a tax return if you’re MFS? Just $5.
Ask Questions
Most taxpayers will continue to file MFJ, but that doesn’t mean that it’s the right choice for you. And keep in mind that the answer can change from year to year.
Run the numbers—taking into consideration all of the pieces of your financial pictures—to see if it makes sense for you. If you have questions about how filing could impact your student loans or your retirement, ask your tax professional before ticking a box.