Under normal circumstances, filing jointly is the better option for married couples. More tax credits are available to married couples filing jointly than those filing separately, including: 

  • Earned Income Credit
  • Child Tax Credit
  • Child and Dependent Care Credit
  • Elderly and Disabled Credit
  • American Opportunity Credit
  • Lifetime Learning Credit
  • Student Loan Interest Deductions
  • Tuition and Fees Deductions
  • Adoption Expenses credits
  • Deduction for Net Capital Losses
  • Roth IRA contributions
  • U.S. Bond interest tax-free exclusion
  • Social Security benefits tax-free exclusion

Even just a few of these credits could amount to substantial savings for a household, especially those with children. Given these benefits, why would anyone want to file separately? There are circumstances in which that is the better choice. 

The most obvious is if the couple is separated but not yet divorced. In such cases, individual spouses may want to keep expenses separate. They will lose many credits, but it may be more beneficial in the long-run for the divorce settlement. Filing separately might also be the best option for married couples living apart for other reasons. 

Filing jointly makes you both liable for the veracity of the information on the tax return. If you suspect your spouse is being dishonest with the assets listed or the deductions taken, by filing separately you will not be held responsible for what your spouse submits. 

Another situation in which filing separately is the right choice for a married couple is when one spouse has a very large potential deduction. Since the standard deduction for those married filing jointly is $24,000 and for those filing separately is $12,000, if one spouse’s potential deductions are significantly higher than $12,000, there may be a tax advantage to taking this route. However, there’s a catch to this – if you choose to itemize, so must your spouse, even if your spouse has a small potential deduction. 

In this situation, it’s very important to crunch the numbers to see if the tax benefit from filing separately so that one spouse can itemize outweighs the losses of your spouse’s itemization along with all the credits you might otherwise have been entitled to. 

In a nutshell, if you’re living together, have children, do not suspect dishonesty on the part of your spouse, and do not have very high deductible expenses, you may be better off filing jointly and taking the standard deduction. But sometimes the best choice is to file separately.

Come in and talk to us here at F.J. Koelle & Associates, Certified Public Accountants. We’ll crunch the numbers for you, look at all options, and find what’s best for you to minimize your tax burden. We’ve been serving Willow Grove, Huntingdon Valley, Dresher, Fort Washington, Abington, and surrounding areas for over 30 years. We can help you.