Married Filing Separate Status

March 22, 2012 by staff 

Married Filing Separate Status, Every year when I do my taxes I notice the “married filing separately” option under filing status. In what circumstance would I be better off choosing this over “married filing jointly”?

For the vast majority of married taxpayers, “married filing jointly” is the way to go. In fact, just 4.5% of married couples filed separately for the 2009 tax year, the most recent annual data available. That represented 1.8% of all returns filed that year.

One of the main benefits to filing jointly, aside from simplicity, is that it entitles the filers to use a variety of tax breaks, including education credits such as the lifetime learning credit, deductions for student loan interest, and the credit for child- and dependent-care expenses. Married couples who file separately typically cannot use these credits and deductions, meaning that they might be forfeiting significant tax savings.

For married couples in which one spouse earns considerably more than the other, joint filing also might take better advantage of tax-bracket structure by keeping more of the high earner’s income in a lower bracket. For example, if one spouse has a taxable income of $90,000 and the other a taxable income of $40,000, their combined income of $130,000 puts them in the 25% bracket. But if they file separately, the spouse earning $90,000 moves up to the 28% bracket, meaning that about $20,000 in income is taxed at the higher rate (based on 2011 brackets and rates).

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