If you are married, there is no prohibition on changing your filing status for tax purposes, but it’s important to make sure the switch in filing status benefits you. Married couples may choose to file separately, even if they live together. Separate filers are accountable only for their individual tax liability ... not that of their spouses.
You can change your filing status from married filing jointly to married filing separately in any year, but just make sure the change benefits you.
Filing Taxes Separately After Filing Jointly
The IRS is very flexible about how married couples file their taxes. Even if you’ve filed jointly for years, there may come a time when it makes more sense to file separately. However, it is important to figure out how much tax you would owe or how much of a refund you might receive using both methods beforehand, so you can make an informed decision about your filing status.
Married filing separately rules mean that each spouse reports their own individual income, deductions and the like on separate returns, and the only tax liability they are responsible for is their own. Keep in mind that for spouses who are married and filing separately, the child tax credit is generally unavailable, as are various education credits. Lower-income filers cannot claim the earned income credit if filing separately.
Benefits of Married Filing Separately
While there are generally more benefits when you are married filing jointly, there are some benefits to going the married filing separately route. If either of you owes child support, student loan payments or back taxes, filing separately is often a wise choice. Otherwise, the IRS may take any refunds to pay the debt and the other spouse may suffer as a result. If you suspect your spouse is hiding income or is cheating on taxes in some other manner, filing separately is a good way to protect yourself if the IRS performs an audit.
Couples who are both high earners may benefit from married filing separately status, as their large incomes may mean they lose deductions if they file jointly. If one spouse incurs large medical expenses, it may also make sense to file separately, since they may be able to deduct those expenses if their adjusted gross income meets the percentage limits. That may not prove the case if they are married and file jointly.
Effect of the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, signed into law on Dec. 22, 2017, makes changes that may affect a couple’s decision about changing their filing status. If you file separately, you cannot claim the standard deduction if your spouse itemizes their deductions, but the new law raised the standard deduction to $12,000 per person. That means those who formerly would itemize deductions are less likely to do so. The lowering of the tax bracket percentages means those filing separately may owe less in tax as well.
Exploring 2019 Tax Revisions
Medical Expense Deductions
If you have medical expenses totaling more than 7.5 percent of your adjusted gross income, you can deduct them for both 2017 and 2018. The new law raises the limit to 10 percent for 2019. If you and your spouse had an adjusted gross income of $100,000 and filed jointly, you could not deduct medical expenses unless they reached a minimum of $7,500. If by filing separately a spouse has an adjusted gross income of $50,000, the minimum deductible amount is $3,750. Note that both spouses must itemize in order for one spouse to qualify for the deduction.
Married filing separately taxpayers who are covered by a workplace retirement plan can only claim a partial deduction for an IRA plan if their modified adjusted gross income is less than $10,000. If their income is more than $10,000, they cannot take a deduction. But if the married couple files a joint return, they can claim a full deduction up to the contribution limit if their joint income is $103,000 or less and a partial deduction if their income is more than $103,000 and less than $123,000.
Student Loan Interest Deductions
If you're married, you can only claim the interest you paid on your student loans if you file jointly -- the lesser of $2,500 or the actual amount of interest you paid, subject to income limit phaseouts. Separate filers cannot claim any student-loan interest.
- H&R Block: What is the benefit of married filing jointly vs. married filing separately?
- CNBC: It's now easier to qualify for the medical expense deduction
- IRS: 2019 IRA Deduction Limits - Effect of Modified AGI on Deduction if You are Covered by a Retirement Plan at Work
- IRS: Topic Number 456 - Student Loan Interest Deduction
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.