Posted by Fletcher Accounting and Tax Service Inc.

Breaking Down Married but Filing Separately Tax Status

Breaking Down Married but Filing Separately Tax Status

If you want to separate your tax liability from your spouse's, the married filing separately status could be beneficial. Take note that having this status means that you pay more tax and you will miss a lot of tax breaks. 

In your income tax return, one of the first boxes you have to check is your filing status. The choice that you will make affects the amount of taxes you will pay and the standard deduction you can take and any tax breaks you are eligible to claim that's why it is very important to pick the right one for your situation. 

Some married couples may find it to their advantage to separate returns based on their tax situations although filing jointly usually results in a lower tax bill. To help you decide if this status could work for you, check out some information below.

Single, Married filing jointly, married filing separately, head of household and qualifying widow(er) is the five filing statuses the IRS recognizes. According to the IRS, only 30.7 million people used the married filing separately status out of the 150.3 million federal returns filed in the 2016 tax year. 

President of College Aid Planners, Joe Orsolini said that you generally give up a lot and pay a lot in taxes to file separately. 

Requirements to be eligible for married filing separately

You may choose the married filing separately status for the entire tax year if you are considered as married on Dec. 31 of the tax year. Two spouses generally have to use the married filing separately status if they cannot agree to file a joint return. 

You may qualify for the head-of-household filing status if you have a dependent at living at home and you are considered unmarried by the IRS, this status is actually more beneficial than married filing separately. 

You must meet the following criteria to be considered unmarried for tax purposes:

  • From July to December of the tax year, you are living separately from your spouse (special circumstances such as medical care, business assignment, serving the military or attending school don't count).
  • Separate tax returns are filed.
  • In maintaining your home for the tax year, you are paying more than half of the cost.

You must also have had a child, stepchild or foster child residing with you for more than half the tax year that you can claim as your dependent if you meet the criteria to be considered unmarried and if you want to file as head of household. 

The following are a few life events that may cause you to change your status to or from married filing separately:

  • You may choose to use the married filing separately in any year if you are married. But, you cannot amend the return to file two separate returns using the married filing separately status once you have actually filed your return as married filing jointly. 
  • You can start using the single or head-of-household status or whichever you qualify for if you legally separate from or divorce your spouse. 
  • You may use either the married filing jointly or filing separately status for your spouse's tax year death if your spouse passes away. After that, if the eligible surviving spouse has one or more qualifying dependent, he or she may use the qualified widow(er) status. 

Married filing separately income requirements

If an individual meets certain age and income requirements for their filing status, they aren't required to file a federal income tax return. But filing a federal income tax return for most separate filers. 

If the gross income is at least $5 of the people with a married filing separately status, the IRS requires them to file a return regardless of their age. 

So, unless if the gross income of a married couple younger than 65 was at least $24,000 and filing jointly, then they don't have to file. But they would be required to file if they're using the married filing separately status. 

You may have to include Social Security benefits as gross income in order to determine if you're required to file a return and you if have a married filing separately as a status. If either of the following applies, you will include a portion of your Social Security income:

  • Any time during the tax year, you lived with a spouse.
  • The combined gross income is more than $25,000 including any tax-exempt interest and half your Social Security benefits
  • Married and has kids and filing separately

Especially for 2018, during tax time, several tax breaks can benefit parents. 

Orsolini said that a lot more people will now be qualifying for the child tax credit that probably did not in the past and children are very helpful on tax returns. 

That's because the income threshold has been raised by the Tax Cuts and Jobs Act 2017 at which the credit begins to phase out. 

Only one parent can claim a qualifying child when filing separately and many of the tax breaks will follow. Generally, the claim will be given to the parent who provides the child's housing for most of the tax year. The IRS will require the parent with the highest adjusted gross income to claim the child if the child lived with both parents. 

Calculating your tax liability for both filing statuses married filing jointly or married filing separately to help you see which makes sense for your tax situation. To help you compare the taxes you would pay filing a joint return versus filing a separate return, there is a Marriage Bonus and Penalty Tax Calculator on the Tax Policy Center. 

Fletcher Accounting and Tax Service Inc.
Contact This Member