Most married couples file joint federal income tax returns, but there are a few instances where it may make sense to file separately.
Bob Meighan, vice president of customer advocacy for the online tax-preparation firm TurboTax, outlines three reasons you may want to file independently:
** To take advantage of deductions. Certain tax deductions, such as medical expenses, must exceed a certain percentage of income. If a spouse with significant medical expenses could more easily surpass the threshold based on his or her adjusted gross income, it may be wise to file separately to save. You may deduct only the amount of your total medical expenses that exceed 10% of your AGI or 7.5% if you or your spouse is 65 or older. (The 7.5% limitation is effective only from Jan. 1, 2013, to Dec. 31, 2016, for individuals age 65 and older and their spouses). See IRS Publication 502, Medical and Dental Expenses, for more information. Also note there are special rules for residents of community property states, so see IRS Publication 555, Community Property, for more details.
** To qualify for a lower tax rate on capital gains and dividends. If one spouse is earning all the capital gains and dividends, filing separately could mean a lower tax rate on that income, depending on several factors including that spouse's income. See IRS Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), for more details.
** To potentially protect yourself from incorrect filings. In certain situations, one spouse may be relieved of joint responsibility for tax, interest and penalties on a joint return for items that the other spouse incorrectly reported on the joint return. However, if one spouse has reservations about the other spouse's reported income or other information attributable to that spouse, those spouses may want to consider filing separately. Filing jointly generally means being responsible for the information reported on the joint tax return. Likewise, filing separately could make sense if one spouse has not made child support payments. The IRS can seize tax refunds -- whether joint or separate -- for unpaid support. See IRS Publication 501, Exemptions, Standard Deduction and Filing Information, for more details.
Meighan adds it's important to carefully consider your situation and consult a tax professional for advice before choosing how to file.
