What is the Benefit of Filing Married Vs. Separate for the Child Tax Credit?
Most married couples fare better on their taxes if they opt for the married filing jointly status, although there may be situations or circumstances where the married filing separately status makes more sense. However, if you are married and filing separately rather than jointly, the child tax credit may become an issue. While filing separately may make sense for other reasons, it significantly impacts the amount of the child tax credit you can benefit from.
A married couple filing jointly can receive twice as much for the child tax credit compared with a married couple filing separately.
Child Tax Credit and Filing Status
There’s no question that when it comes to the child tax credit, it makes more sense to file jointly rather than separately. Qualifying children for the child tax credit are under age 16 at the end of the year and must be American citizens, U.S. nationals or resident aliens. Once a child reaches age 17, he or she is no longer eligible for the credit.
The parent must claim the child as a dependent on their tax return, and the child must have lived with them for more than six months out of the year. This is where it can get tricky for married couples filing separately. Because both parents can’t claim the child, the parent who does claim the child on their return will receive only half the amount they would receive if filing jointly.
Married Filing Separately Rules
Most married couples benefit more from filing jointly than filing separately, but there are exceptions. When married couples file separately, each reports their own incomes, deductions and credits on separate tax returns, and are thus responsible only for their own tax liability. It makes sense to choose this filing status if one spouse owes back taxes, child support or student loans, because the IRS will take any refund and put it toward those obligations.
When such a couple files jointly, the spouse who did not incur those debts will lose their share of any refund. If a spouse suspects their husband or wife is a tax cheat, it is probably a good idea to file separately. When both spouses earn high incomes, filing separately may lessen the tax bite.
Both spouses must either itemize or take the standard deduction when filing separately. The IRS doesn’t permit separate married filers to pick and choose in this matter.
Child Tax Credit in 2019
The Tax Cuts and Jobs Act, signed into law on Dec. 22, 2017, eliminated personal exemptions while raising the standard deduction. For the 2019 tax year, this amount is $12,200 per person, so a married couple filing jointly would have a $24,400 standard deduction.
It also increased the child tax credit to $2,000 for each qualifying child. Qualifying children must have a Social Security number, while previously a Social Security number could be supplied retroactively the following tax year.
Because personal exemptions are gone until the law expires at the end of 2025, the child tax credit is more attractive to many families and many more families are now eligible for it. The law now begins to phase out at $400,000 for married couples and $200,000 for single filers and heads of households.
- Internal Revenue Service: Publication 972 – Child Tax Credit
- EFile: Who Is Eligible to Claim the Child Tax Credit?
- EFile: The Married Filing Separately Tax Filing Status
- Journal of Accountancy: Child Tax Credit Now Higher, More Widely Available
- Forbes: IRS Announces 2019 Tax Rates, Standard Deduction Amounts and More
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.