If you’re like the vast majority of Americans, when you got married, you and your spouse started filing a joint tax return without giving it a second thought. While there’s nothing wrong with this, under certain circumstances, filing separately can actually earn you a bigger refund.
So how do you know which option is right for you? Today we examine some of the factors to help you make this determination:
You may want to file separately if:
- You or your spouse has high medical expenses. In order to claim certain deductions—including medical expenses—the IRS considers your adjusted gross income (AGI). If you and your spouse file jointly, your AGI will be higher, which could make you ineligible for this deduction.
- You or your spouse has significant miscellaneous deductions. Perhaps you’re a frequent business traveler and accrue travel-related expenses. Or maybe you’re a business owner with unreimbursed business expenses. If these expenses constitute a certain percentage of your AGI, they can lower your taxable income. You’re more likely to hit that threshold if you file separately.
- You and your spouse earn about the same amount. If you both have similar earnings, it could be worthwhile to file separately, because filing jointly could bump you into a higher tax bracket.
Nonetheless, it’s worth noting that filing separately can disqualify you from other benefits, such as the Earned Income Credit, the Child and Dependent Care Credit and certain education benefits.
Due to all of the factors that go into determining whether it’s more advantageous to file separate or joint tax returns, the easiest solution is to have an experienced tax attorney calculate your taxes both ways in order to determine which alternative will yield the highest refund.