Married filing separately: Some things to know

Couple working on their tax return on opposite sides of the kitchen table, trying to decide if they should use the married filing separately tax status. Couple working on their tax return on opposite sides of the kitchen table, trying to decide if they should use the married filing separately tax status. Image:

In a Nutshell

The married filing separately status could be beneficial if you want to separate your tax liability from your spouse’s. But keep in mind that using this status means you may pay more tax and miss out on a number of tax breaks.

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Married couples have a yearly choice to make come tax time: File jointly or separately?

One of the first boxes you’ll check on an income tax return is your filing status. It’s important to pick the right one for your situation, because this choice affects the amount of taxes you’ll pay, the standard deduction you can take and any tax breaks you’re eligible to claim.

Although filing jointly usually results in a lower tax bill, some married couples may find it to their advantage to file separate returns based on their tax situation. Here’s some information to help you decide if this filing status could work for you.


Filing-status basics

The IRS recognizes five filing statuses: single, married filing jointly, married filing separately, head of household and qualifying widow(er). Of the 150.3 million federal returns filed in tax year 2016, only 3.07 million people used the married filing separately status, according to the IRS.

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“You generally give up a lot and pay a lot more in taxes to file separately,” says Joe Orsolini, president of College Aid Planners. 

Eligibility requirements for married filing separately

If you’re considered married on Dec. 31 of the tax year, then you may choose the married filing separately status for that entire tax year. If two spouses can’t agree to file a joint return, then they’ll generally have to use the married filing separately status.

If you have a dependent living at home and you’re considered unmarried by the IRS, you may qualify for the head-of-household filing status, which is typically more beneficial than married filing separately.

To be considered unmarried for tax purposes you must meet all the following criteria:

  • You lived separately from your spouse from July to December of the tax year (time apart for special circumstances like a business assignment, medical care, attending school or serving in the military don’t count).
  • You file separate tax returns.
  • You paid more than half the cost of maintaining your home for the tax year.

If you meet the criteria to be considered unmarried and want to file as head of household you must also have had a child, stepchild or foster child residing with you for more than half the tax year that you can claim as your dependent.

How does divorce change your taxes?

A few life events may cause you to change your status to or from married filing separately, including the following:

  • If you’re married, you may choose to use the married filing separately status in any year. Once you’ve actually filed your return as married filing jointly though, you can’t amend that return to file two separate returns using the married filing separately status.
  • If you legally separate from or divorce your spouse, then you can start using the single or head-of-household status, whichever you qualify for.
  • If your spouse passes away, you may use either the married filing jointly or filing separately status for the tax year of your spouse’s death. After that, eligible surviving spouses may use the qualified widow(er) status if they have one or more qualifying dependents.

Income requirements for married filing separately

Some people aren’t required to file a federal income tax return if they meet certain age and income requirements for their filing status. But most separate filers will have to file a federal income tax return.

That’s because the IRS requires people with a married-filing-separately status to file a return if their gross income was at least $5, regardless of age.

So where a married couple who are both younger than 65 and filing jointly wouldn’t have to file unless their gross income was at least $24,000, if the same couple decides to use the married filing separately status, they would be required to file.

If you’re married filing separately, you may have to include Social Security benefits as gross income in order to determine if you’re required to file a return. You’ll include a portion of your Social Security income if either of the following apply:

  • You lived with a spouse at any time during the tax year.
  • The combination of your gross income, any tax-exempt interest and half your Social Security benefits is more than $25,000.

Married filing separately with kids

Several tax breaks can benefit parents come tax time, especially for 2018.

“A lot more people will now be qualifying for the child tax credit that probably did not in the past,” Orsolini says.

That’s because the Tax Cuts and Jobs Act of 2017 raised the income threshold at which the credit begins to phase out.

“Children are very helpful on tax returns,” says Orsolini.

But when filing separately, only one parent can claim a qualifying child — and many of the tax breaks that follow. Generally, the parent who provides the child’s housing for most of the tax year gets to claim the child and the tax breaks. If the child lived with both parents equally, then the IRS requires the parent with the highest adjusted gross income to claim the child.

FAST FACTS

Who qualifies as a dependent?

For any child or adult to be considered your dependent, they must meet several requirements.

  • Be a U.S. citizen, national or resident alien, or a resident of Canada or Mexico
  • Not be claimed as a dependent on anyone else’s tax return
  • Not file a tax return as married filing jointly — unless they’re filing solely to get a refund of income tax they paid
  • Not claim anyone else as a dependent on their own return
  • Receive more than half their support from you

Learn more about who qualifies as a dependent.

Advantages to married filing separately

In some situations, it could make sense to file separately. Here are just a few of those situations.

Get a lower student loan repayment

If you’re on an income-based repayment plan for a federal student loan, in most cases, the payment will be based on only your income, and not your spouse’s, if you file separately. But filing separately also means you can’t take the student loan interest deduction or education credits, like the American opportunity tax credit or lifetime learning credit.

Separate tax liability

In the eyes of the IRS, signing a joint return means both spouses are equally liable for all taxes and penalties for that tax year — even if you later divorce. The married-filing-separately status allows you to claim responsibility only for your own return. For example, two spouses may choose to file separately if they’re planning to divorce and wish to keep their finances separate.

Protect refund money

If your spouse has a delinquent federal income tax, student loan, child support obligation or other debt, the Treasury Offset Program allows the Department of the Treasury to seize any tax refund your spouse may be due. If you file a joint return, your refund will also be considered shared. That means if your spouse owes and you file jointly, you and your refund could be on the hook for their debt.

Before filing separate returns, look into innocent spouse relief. You may be able to get a portion of your tax refund while still filing jointly, says Kristin Ingram, certified public accountant at Accounting in Focus.

“A lot of people think that you have to file separately in order to use the injured spouse rule,” she says, “but that is not the case.”

Maximize a disparity in incomes

A spouse who earns much less than the other spouse may come out ahead by filing separately.

For example, “if one spouse earns $1 million a year, and the other earns $80,000, that might be an instance where you would use married filing separately,” says Ingram.

In this scenario, the low-income spouse would enjoy a lower tax bracket and may be able to claim some tax breaks.

Drawbacks of married filing separately

Even if filing separately does make sense for your situation, there are still a few downsides you should know about.

For example, although two spouses are filing separate returns, they’ll have to agree on one thing: Either they both must claim the standard deduction, or they both must itemize expenses.

And separate filers get the lowest standard deduction rate of $12,000 — the same amount as single filers.

Filing separately also means giving up certain tax deductions and credits or getting a reduced tax break. Here are the restrictions for people using the married-filing-separately status.

Separate filers can’t claim these tax breaks The value of these tax breaks is reduced for separate filers Separate filers who lived with a spouse at any time during the tax year must follow these guidelines
  • Earned income credit
  • Exclusion or credit for adoption expenses (in most cases)
  • American opportunity credit
  • Lifetime learning credit
  • Student loan interest deduction
  • Interest income from qualified U.S. savings bonds used for higher-education expenses
  • Child tax credit
  • Retirement savings contributions credit
  • Itemized deductions
  • Capital loss deduction
  • Standard deduction
  • Alternative minimum tax exemption
  • Child and dependent care expenses: The deduction is limited unless you’re legally separated or living apart
  • Can’t claim the elderly and disabled credit
  • When reporting income, you must include up to 85% of Social Security income or equivalent railroad retirement benefits received
  • If you or your spouse contributed to an employer-sponsored retirement plan, like an IRA, then the deduction may be greatly reduced or eliminated if your income is more than a certain amount

Tax rates and standard deduction for married filing separately

For your 2018 tax return, you can’t claim personal exemptions for yourself or anyone else. But you can lower your tax burden by either itemizing your deductions or taking the standard deduction, a dollar amount that automatically reduces your taxable income.

Standard deduction vs. itemizing: Which should you choose for 2018?

In 2018, the standard deduction is $12,000 for separate filers. It could be higher for people who are 65 or older or blind.

Here are the tax rates and corresponding thresholds for separate filers for 2018.

Tax rate Married filing separately filing status
10% $0–$9,525
12% $9,526–$38,700
22% $38,701–$82,500
24% $82,501–$157,500
32% $157,501–$200,000
35% $200,001–$300,000
37% $300,001 and more

The U.S. tax code is progressive. That means it’s possible for your income to fall into multiple tax brackets. If that’s the case, then you’ll pay the rate for each bracket only on the portion of your income that falls within the thresholds of that bracket. And for most brackets, there’s an additional amount of tax you’ll pay besides the percentage of income.

For example, a married couple filing a separate return in 2018 and who has taxable income of $35,000 would pay 10% on the first $9,525 of taxable income and 12% on the remaining $25,475.

Their tax calculation would look like this.

First tax rate that applies: $9,525 x .10 = $952.50

Second tax rate that applies: $25,475 x .12 = $3,057

Total tax: $952.50 + $3,057 = $4,010


Bottom line

If you’re not sure which filing status to use and you’re eligible for either married filing jointly or married filing separately, calculate your tax liability for both to see which makes sense for your tax situation. The Tax Policy Center has a Marriage Bonus and Penalty Tax Calculator to help you compare the taxes you would pay filing a joint return versus filing separate returns. Credit Karma Tax®, which is always free to e-file, can help you decide which tax status is best for you.