By Karen Hube

Married couples may be bound to each other in good times and in bad, but that doesn't mean they have to be in taxes, too.

While most married people file a joint tax return and benefit from doing so, a growing number are choosing to file separately.

"Sometimes the numbers line up perfectly for filing separately," says Matt Metras, an enrolled agent at MDM Financial Services. "I've even done it myself."

About 7% of married couples opt to file separate returns, up from 4.7% a decade ago. The Internal Revenue Service considers you a married couple for tax purposes if you are married on the last day of the tax year.

If you and your spouse choose to file a joint tax return, your incomes are combined and tax benefits and liabilities are shared. When filing separately, each spouse reports their individual incomes on their own separate return.

Generally filing jointly leads to a lower tax bill, because certain deductions and credits are only available to joint filers, including the child and dependent care credit, earned-income tax credit, the American opportunity tax credit and lifetime learning credit.

But here are factors that can tip the scale in favor of filing separately:

High medical expenses

When deductible expenses are limited based on income, a couple may be able to maximize the deductions and come out with a lower tax bill by each filing their own return, says Andy Phillips, vice president of the H&R Block Tax Institute.

For example, medical expenses can only be deducted to the extent they exceed 7.5% of your adjusted gross income.

"You may have one spouse with significant medical expenses, but the couple's joint combined income doesn't allow them to deduct," Phillips says.

Filing separate returns may enable medical deductions.

Consider a married couple with a combined adjusted gross income of $300,000. To be able to deduct any medical expenses based on that income, they would have to exceed 7.5%, or $22,500.

Assume one spouse who earns $60,000 annually incurs $20,000 in medical expenses. None would be deductible with a joint return.

"By filing separately, that spouse gets a deduction of $15,500 as long as he itemizes deductions," Phillips says.

State tax considerations

Another tax-driven reason to file separately: "When the state tax scenario and the federal interact in the right way," Metras says.

When each spouse's income exceeds the married filing separately top income threshold, there is often little difference in their federal tax result between filing jointly or separately -- but there could be a big enough state tax difference to favor filing separately, says Sean McKay, a partner at UHY.

Consider a couple living in Massachusetts, which imposes a higher income-tax rate on incomes over $1 million: 9% versus 5% for lower incomes.

"If one spouse earns $800,000 and the other earns $4 million, that entire $800,000 would be taxed at 5% instead of 9%, and the federal difference between filing jointly or separately would be extremely small, " McKay says. "They may benefit from filing separately."

Your filing status must be the same for both federal and state taxes. Massachusetts was an exception but changed its rules starting for 2024 taxes.

Student loans

When one spouse has an income-based student loan repayment plan, combining incomes in a joint return could result in a bigger payment, says Jane Ditelberg, director of tax planning at Northern Trust Wealth Management.

Even if one spouse doesn't have any student loan debt, the repayment plans are based on income reported on tax returns.

By filing separate returns, the repayment calculation can be based solely on the indebted spouse's income.

Your spouse's tax history and habits

Also consider if one spouse owes back taxes. On a joint return, the IRS would withhold any refund as an offset.

"If the other spouse doesn't owe past tax debt and would get a refund, separate returns may be best," Phillips says.

Another issue worth weighing is liability.

"With a joint return, If my wife is self-employed and isn't reporting her income, the IRS can come after the both of us," says Jere Doyle, senior vice president at BNY Mellon. "If you think your spouse isn't being transparent, you might think about filing separately."

If you file separately and realize after your tax-filing deadline that you would have been better off filing jointly, you can prepare and submit an amended joint return.

"But after your filing deadline you can't amend a joint return to separate returns," Doyle says. "Once you file jointly they have you on the hook for your spouse's liability and don't want to let you revise that."

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February 02, 2025 04:00 ET (09:00 GMT)

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