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Married File Separately

Married File Separately-IRS Publication #501

If you are married, you and your spouse can choose whether to file a joint tax return together or to file separate tax returns.

Married Filing Separately:

You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own taxes, if you want to protect your tax refund, or if it results in less overall tax than filing a joint tax return.

If you file a separate return, you and your spouse report only your own income, deductions, and tax credits.

You and your spouse are only responsible for your own individual tax liability. You will not be responsible for any tax, back taxes, penalties, interest that results from your spouse's tax return.

You must include your spouse's name and social security number on your tax return.

Head of Household

If you have a dependent living at home and you're considered unmarried, You may be able to choose head of household filing status: Here are some requirements for Head Of Hosehold Filing Status:

You lived separately from your spouse from July-December of the tax year (the last 6 months of the tax year)

You file a separate tax return

You paid more than half the cost on maintainng your home for the year.

You have a child, stepchild, or foster child residing with you for more than half the year that you can claim as a dependent.

Parents do not have to live with you but you must have paid more than half the cost of maintaining their household for the year.

Death of a Spouse:

If your spouse passes away, you can file either jointly with your deceased spouse or separately for the tax year of your spouse's death (assuming you do not remarry by the end of the year of death).

After that, eligible surviving spouse's may use the Qualifying Widow(er) status for 2 years following the year your spouse died if they have one or more qualifying dependents, (assuming they did not remarry).

Changing Your Mind After Filing Separate Tax Returns:

Once you actually file jointly, you cannot amend your tax return to file two separate returns using married file separately.

If you filed separately, you can change your mind and file jointly within 3 years from the due date of the original return due date, not counting extensions.

Married Filing Separately--Special Rules to Consider:

The following are NOT allowed if you file married file separately:

1-Earned Income Credit

2-Student Loan Interest Deduction

3-Education Tax Credits (American Opportunity Credit or Lifetime Learning Credit).

4-Interest Income Exclusion for qualified U.S. Savings Bonds your used for higher education expenses.

5-Tuition & Fees Deduction

6-Exclusion or credit for Adoption expenses (in most cases)

The following deductions and credits are reduced at income levels half those for a joint return:

1-Child Tax Credit (will be half the amount that it would be on a joint tax return).

2-Credit for other dependents

3-Retirement savings contributions credit (will be limited to half the amount that it would be on a joint tax return).

4-Capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).

5-If your spouse itemizes deductions, you can't claim the standard deduction. Both spouses must either itemize deductions or claim the standard deduction.

6-If you claim the standard deduction, your standard deduction will be half of what it would be on a joint tax return.

Rental Activity Losses: The $25,000 Special Loss Allowance Rule.

If you actively participate in a passive rental real estate activity that produced a loss, you can generally deduct the loss against your nonpassive income up to $25,000 (some limits apply to this general rule). Married persons who file separate returns who lived together at any time during the year cannot claim this special allowance. Married persons who file separate returns who lived apart at all times during the tax year are each allowed a $12,500 maximum special loss allowance for losses from passive rental real estate activities.

Which Is Better?

Prepare your taxes both ways, married file jointly and married file separately to see which gives you the lower overall total tax liability.

Finally, consider the responsibility if you file jointly where both spouses are responsible for taxes, penalties, and interest on the joint tax return.

CALL NOW 561-746-1926 or 561-339-8102 if you have any questions or concenrs or would like to schedule a FREE, Confidential, No-Obligation Tax-Saving Consultation.