Taxes Benefits of Filing Separately When Married

by David Carnes

    A married couple can choose to file their federal income tax returns either jointly or separately. Most couples choose to file jointly, and even the IRS warns taxpayers that filing separately is likely to increase their tax bill. Although filing separately carries with it important disadvantages such as limited deductions, you still might end up with a lower tax bill by filing separately. Other considerations might come into play as well.

    Limited Liability

    When you file jointly, the IRS treats you and your spouse as partners for tax purposes, meaning that each of you is liable for the tax debts of the other. This liability extends to penalties and interest, even if these are the result of an error made by your spouse. If your spouse cannot pay the tax bill, the IRS has the right to place a lien on your property and even auction it to satisfy the debt. When you file separately, you are responsible only for your own tax debts.

    Avoiding the "Marriage Penalty"

    When you file a joint return, you must add your spouse's taxable income to yours for the purposes of determining your tax bracket. Although due to legal reforms most couples will not be kicked into a higher tax bracket by filing jointly, a few taxpayers still find themselves paying higher tax rates by filing jointly. A marriage penalty is most likely to occur if your combined taxable income exceeds the cutoff for the 15 percent tax bracket. If you file separately, only your income is included when determining your tax bracket.

    Medical and Dental Expenses

    You can only deduct medical and dental expenses to the extent that they exceed 7.5 percent of your adjusted gross income -- in other words, you must subtract 7.5 percent of your AGI from your total medical and dental expenses to arrive at your deduction amount. For many taxpayers, this leaves no deduction at all. If your spouse makes more than you do and you have high medical expenses, you can reach the 7.5 percent barrier more easily by filing separately. The threshold will increase to 10 percent in 2013. Certain other deductions, such as business expenses, are also subject to minimum thresholds, which are based on your income alone if you file separately.

    Confidentiality

    If you are separated or in the process of divorce, or if you simply don't trust your spouse, it's hard to keep your finances a secret since he can always ask the IRS for a copy of your joint tax return. If you file separately, by contrast, you don't need to reveal details of your financial situation to your spouse.

    Photo Credits

    • Secret image by Alexander Oshvintsev from Fotolia.com

    About the Author

    David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

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