When Does it Pay for a Couple to File Separately?

By Larry Parr

IRS tax codes in the U.S. are written in such a way that couples will best benefit from filing their tax return jointly.  However, there are several circumstances in which it might be advantageous for a married couple to file separately.  If a couple files jointly, they are generally entitled to credits for child care, adoption expenses, interest on loans for education, and IRA contributions.  Many of these deductions are not available to taxpayers filing separately.

When a couple files jointly, the IRS considers their income to be from a single individual.  But the IRS also considers any money owed to the government to be from a “single individual”, and that is where problems can arise. For example, if the couple is only recently married and one partner has a large tax debt, it is sometimes better if that debt were not charged against both partners. By filing separately, the tax owed from the debt is only collected from one spouse, leaving any refund due to the other partner untouched.

This is especially true if you even suspect that a divorce is somewhere on the horizon.  Case in point: one spouse creates a huge tax liability and the couple files jointly, then the spouse who created the liability skips the country (or dies), leaving the other spouse to pay the debt.  If the couple had filed separately the debt would not fall on the innocent spouse.

There is also the question of tax cheating.  If one spouse fails to report taxable income but the other spouse is totally honest, the honest spouse is liable for any consequences of an audit if they have filed jointly, but not if they file separately.
If one spouse has a lot of medical expenses it can also be advantageous to file separately.  In some cases the medical deduction applied against just one income can be much better than that same deduction taken against your joint income.
Does one spouse pay child support from a previous marriage?  If so, any overdue support payments could be taken out of the total tax refund of both partners if there is a joint filing.

In most cases, a married couple filing jointly will pay less federal tax than they would if they filed separately.  But the devil is in the details, as they say, and each case must be looked at individually.  If there is any reason to suspect that separate filings would be beneficial to one or both partners, legal help should be sought to look over the situation and recommend the appropriate course of action.