Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.
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• For tax year 2021, most married couples under 65 filing a joint return receive a standard deduction of $25,100, while couples filing separately receive a standard deduction of $12,550.
• Joint filers usually receive higher income thresholds for certain tax breaks, such as the deduction for contributing to an IRA.
• If you’re married and file separately, you may face a higher tax rate and pay more tax.
• Filing separately may be a benefit if you have a large amount of out-of-pocket medical expenses. It may be easier to reach the 7.5% threshold of your adjusted gross income to qualify for medical deductions if you only claim one income.
Advantages of filing jointly
There are many advantages to filing a joint tax return with your spouse. Joint filers receive one of the largest standard deductions each year, allowing them to deduct a significant amount of income when calculating taxable income.
Couples who file together can usually qualify for multiple tax credits such as the:
- Earned Income Tax Credit
- American Opportunity and Lifetime Learning Education Tax Credits
- Exclusion or credit for adoption expenses
- Child and Dependent Care Tax Credit
Joint filers mostly receive higher income thresholds for certain taxes and deductions—this means they can often earn a larger amount of income and still potentially qualify for certain tax breaks.
Consequences of filing your tax returns separately
On the other hand, couples who file separately typically receive fewer tax benefits. Separate tax returns may result in more tax.
- In 2021, married filing separately taxpayers only receive a standard deduction of $12,550 compared to the $25,100 offered to those who filed jointly.
- If you file a separate return from your spouse, you are often automatically disqualified from several of the tax deductions and credits mentioned earlier.
- In addition, separate filers are usually limited to a smaller IRA contribution deduction.
- They also cannot take the deduction for student loan interest.
- The capital loss deduction limit is $1,500 each when filing separately, instead of $3,000 on a joint return.
TurboTax Tip: The best way to find out if you should file jointly or separately with your spouse is to prepare the tax return both ways. Double check your calculations and then look at the net refund or balance due from each method.
When you might file separately
In rare situations, filing separately may help you save on your tax return.
- For example, if you or your spouse has a large amount of out-of-pocket medical expenses to claim and since the IRS only allows you to deduct the amount of these costs that exceeds 7.5% of your adjusted gross income (AGI) in 2021, it can be difficult to claim most of your expenses if you and your spouse have a high AGI.
- For example, if you have $10,000 in medical expenses and made $50,000. That would meet the 7.5% threshold ($10,000 ÷ $50,000 = 20% of your income).
- Whereas, if together you make $135,000, this would disqualify you from claiming these medical expenses ($10,000 ÷ $135,000 = 7.4% of your income).
- Filing separate returns in such a situation may be beneficial if it allows you to claim more of your available medical deductions by applying the threshold to only one of your incomes.
- When filing separately, both spouses must take the standard deduction or both must itemize their deductions. One spouse cannot itemize their deductions while the other spouse takes the standard deduction.
- When itemizing deductions, each deduction can only be used by one spouse even if both spouses paid for the expense. A deduction can be split between spouses filing separately as long as the total claimed by both spouses does not exceed the total deduction.
For more tips on when you might want to file separately, be sure to check out our article When Married Filing Separately Will Save You Taxes.
Deciding which status to use
The best way to find out if you should file jointly or separately with your spouse is to prepare the tax return both ways. Double check your calculations and then look at the net refund or balance due from each method. If you use TurboTax to prepare your return, we’ll do the calculation for you, and recommend the filing status that gives you the biggest tax savings.
Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.