Married Filing Separately: How it Works & When to Do It | Personal Capital

Picking your first house, learning about each other, planning for your future – of the many joys of marriage, sitting down and figuring out how you ’ ll fix taxes is not normally one of them. If you ’ re married, there are two options for your filing status with the IRS : married filing jointly and married filing individually .

What is Married Filing Separately?

Married file individually is one of five different tax-filing statuses that you can choose from. It means that you and your spouse each reputation income, deductions, credits and exemptions on separate tax returns rather of on one return jointly .
For model, a couple choosing to file individually would each file their own shape 1040 and any play along schedules, like Schedule 1, Schedule A or Schedule D. When filing individually, you and your spouse are only responsible for your own person tax liability. You ’ re not responsible for any tax, penalties or concern that might result from each other ’ randomness returns .

How Married Filing Separately Works

When choosing the marry filing individually, keep in heed that there are a few rules you must follow. For exercise, if one of you itemizes deductions on Schedule A alternatively of taking the standard discount, both of you will have to itemize deductions. And you ’ ll have to decide who gets which deductions, which can get complicated if you want to deduct your mortgage interest, for exercise.

For tax class 2021 the standard deduction is $ 12,550 for married couples filing individually. In tax year 2022 it will rise to $ 12,950. Filing individually might besides exclude you from eligibility for sealed tax deductions and credits ( see below ) .
Read More: Guide to Filing Your Taxes in 2022
Keep in mind that married filing individually and filing as a one unmarried person are two different things. In other words, you can ’ deoxythymidine monophosphate choose the one file condition if you ’ rhenium married. In some situations, the tax brackets are different for single filers and married couples filing individually .

How Married Filing Separately vs Jointly Affects Tax Rates

How you file will impact your income tax bracket. Following are the tax rates for marry individuals filing jointly or individually .

2022 federal income tax rates (for taxes due in April 2023)

Tax Rate Married Filing Jointly Married Filing Separately
10% $0 to $20,550 $0 to $10,275
12% $20,551 to $83,550 $10,276 to 41,775
22% $83,551 to $178,150 $41,776 to $89,075
24% $178,151 to $340,100 $89,076 to $170,050
32% $340,101 to $431,900 $170,051 to $215,950
35% $431,901 to $647,850 $215,951 to $323,925
37% $647,851 or more $323,926 or more

2021 federal income tax rates (for taxes due in April 2022)

Tax Rate Married Filing Jointly Married Filing Separately
10% $0 to $19,900 $0 to $9,950
12% $19,901 to $81,050 $9,951 to $40,525
22% $81,051 to $172,750 $40,526 to $86,375
24% $172,751 to $329,850 $86,376 to $164,925
32% $329,851 to $418,850 $164,926 to $209,425
35% $418,851 to $628,300 $209,426 to $314,150
37% $628,301 or more $314,151 or more

The Benefits of Married Filing Separately

While the tax code encourages marry couples to file their tax returns jointly, there are a few scenarios where married file individually could be beneficial .
These include when both spouses have about the lapp measure of income and when combining income pushes a couple into a higher tax bracket. other scenarios where marry filing individually might make sense include the pursue .

  • You and/or your spouse have deductions based on Adjusted Gross Income (AGI)

High checkup expenses are the most park example of a tax write-off that is impacted by AGI. You can deduct aesculapian expenses that exceed 10 % of your AGI .

  • You and/or your spouse have income-based student loans

Student loan payments are based on each spouse ’ sulfur income, preferably than on joint income as with individually filed returns. In some cases, this may reduce your obligation to make higher scholar loan payments. however, there are besides education tax credits you might lose ( see below ) therefore be certain to weigh your options .

  • You live in a community property state

If you or your spouse live in what is known as a community property state, special rules apply for allocating income and assets. even though you may file distinguish returns, each of you may be obligated to report one-half of unite income and deductions on each return.

  • To protect yourself against liability issues

Married filing individually may be an appropriate option if there is a miss of entrust between spouses. Both partners must consent to filing a joint tax return, so filing individually can help if one spouse suspects the other of tax evasion or misfiling tax documents .

  • You are not willing to file together

Married filing individually can besides accommodate couples who are in the process of divorce or separation. tied if divorce or separation international relations and security network ’ t an return, filing individually can allow each spouse to maintain autonomy over their own tax situation and potentially their own finances .
In cosmopolitan, choosing the marry filing individually status makes the most sense when couples without dependents have large itemize deductions or are separating .

The Drawbacks of Married Filing Separately

The fact is, filing jointly makes sense for most marry couples. In fact, around 95 % of couples decide to file jointly because it tends to result in a lower tax bill and easier file .
One of the biggest drawbacks to married filing individually is that you lose electric potential tax breaks, credits and deductions. These include the pursuit :
The Child and Dependent Care Expenses Credit — This allows you to claim unreimbursed childcare expenses like babysitting, daycare and summer camp as a nonrefundable tax credit .
Education tax credits — These include the american Opportunity Tax Credit and the Lifetime Learning Credit, which help offset costs for post-secondary education .
Student loan interest — The interest paid on student loans may be tax-deductible if you ’ re marry and file jointly .
early tax credits that aren ’ thyroxine available to married couples filing individually include the earn Income Tax Credit ( EITC ), the Adoption Tax Credit and the Credit for the Elderly or Disabled. besides, the Child Tax Credit and the Saver’s Credit will be limited to half the amount they would be if you filed jointly .

Which Filing Status Should You Choose?

The best way to figure out whether filing individually or jointly is best for you is to prepare your tax return both ways and look at which method acting results in the lowest tax liability. If you use tax software to prepare your tax return, many of today ’ s products will perform this calculation for you and provide a recommendation.

Remember, these are merely general guidelines regarding the pros and cons of assorted tax file statuses. It ’ sulfur important to understand the married file individually rules, you should consult a tax professional about your specific circumstances .

The Bottom Line

Determining your tax-filing status is just one part of your overall fiscal plan. You can take a match of actions now to get yourself on the right track .

  1. Sign up for the Personal Capital Dashboard. Millions of people use these free and secure professional-grade online financial tools. You can use them to see all of your accounts in one place, analyze your spending, and plan for long-term financial goals.
  2. Consider talking to a fiduciary financial advisor for more detailed guidance on your retirement saving strategies.

Get Started with Personal Capital ’ s exempt Financial Tools

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