What Happens If You File Separate Federal Tax Returns When Married?
A married couple has the option to file its federal tax returns as married filing jointly or married filing separately. As a rule, the tax benefits are greater if the couple files as married filing jointly, but there are reasons why a couple might choose to file separately.
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Liability
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If a married couple files together and both sign the return, then each is responsible for any tax liability that results from the return. If a person feels that her spouse may be a bit too liberal with deductions or less than honest with reporting income, she may prefer not to be responsible for her spouse's return. By using the married filing separately status, she can avoid liability for her spouse's return.
Medical Expenses
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If one spouse has a large amount of unreimbursed medical expenses for the tax year, the couple may be better off filing separately. Unreimbursed medical expenses can be deducted only if they exceed 7.5 percent of income. With two incomes, the medical expenses may not qualify, whereas if the couple files separately, the spouse with the expenses may be able to take the deduction.
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Consequences
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Filing separately can have a negative impact on a couple's tax liability. Many deductions, including college tuition and student loan interest, cannot be used when filing separately. Credits that are forfeited include the child and dependent care credit, the earned income credit and the American Opportunity tax credit. Also if one spouse itemizes their deductions for large medical expenses, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
