If you and your estranged spouse are leading separate lives in separate homes, you might be thinking of filing your taxes that way, too.
Most married couples residing together under the same roof would see fit to file their income taxes on one joint return.
A number of couples have sought the alternative, which is to file under the status of “married filing separately. ” In this case, each spouse submits their own return and is responsible for their own tax liability.
In the 2016 tax year, the IRS received 3.07 million income tax returns using the “married filing separately” status.
Meanwhile, more than 54 million taxpayers submitted returns as “married filing jointly.”
Be aware that just because you can turn in separate tax returns to the IRS doesn’t mean that you should.
“Married filing separately isn’t the same as just filing as a single taxpayer,” said Robert Westley, CPA and member of the American Institute of CPA’s personal financial specialist committee.
“Generally it’s the least favorable filing status because it limits and can eliminate deductions and credits married couples would otherwise qualify for,” he said.
Two situations
Here’s one case in which it might make sense to file separately: You have an impending divorce and you’ve decided you don’t trust the accuracy of your spouse’s return.
Maybe your estranged spouse’s income sources are fishy.
“This is like Carmela Soprano,” said Westley, referring to the wife of fictitious TV mob boss Tony Soprano. “You want to file separately and detach your liability from your spouse’s return.”
Here, giving up the responsibility for the accuracy of your spouse’s return trumps any tax savings you’d otherwise get from filing jointly, he said.
Filing separately might also make sense if one spouse has significant unreimbursed medical expenses.
Under the new tax law, filers who itemize on their returns may claim medical expenses only to the extent they exceed 7.5 percent of adjusted gross income for 2018.
“In this case, filing separately will lower their [adjusted gross income] and allow the spouse to achieve a greater deduction,” said Westley.
Work with your tax preparer as you determine which status is best for you, because filing separately can come with plenty of disadvantages.
The breaks
Right out the gates, separate filers wind up with a lower standard deduction.
If you’re married and filing separately, you have a standard deduction of $12,000 for 2018, the same as single taxpayers.
Married couples with joint returns are entitled to a $24,000 standard deduction.
Separate filers should also know that if one spouse takes itemized deductions, the other will be required to itemize, as well.
