Married filing jointly vs. separately: How to know when filing apart makes sense

Married couples have a choice every year: file taxes together or apart. While the tax code generally rewards joint returns, there are scenarios where filing separately pays off, experts say.

While “married filing jointly” involves a single return, “married filing separately” means you and your spouse have your own filings with individual income, credits and deductions.

“I’ve found that married filing jointly happens 95% of the time,” said Or Pikary, a certified public account and wealth advisor at Mariner Wealth Advisors in El Segundo, California. But couples need to run the numbers to see which option is best.

“There are a variety of factors that contribute to making this decision,” said Sheneya Wilson, a CPA and founder of Fola Financial in New York.

Here are some situations where married filing separately may make sense, experts say.

With an income-based student loan repayment plan, your monthly payment depends on your adjusted gross income, and typically that’s higher when filing taxes jointly.

It’s one scenario where it may make sense to file separately, Pikary said. But you’ll need to weigh the other downsides of filing apart.

Some couples, whether they’re happily married or planning for divorce, prefer to keep their finances and their share of taxes separate, Wilson said.

For example, one spouse may be a business owner who pays taxes quarterly and the other spouse may have taxes withheld every paycheck. “They may want to keep the tax liability with each spouse,” she said. 

When filing your taxes, you use either the standard deduction or itemized deductions, whichever option is higher.

For 2022, the standard deduction for married couples filing together is $25,900, making it tough to claim tax breaks for medical expenses, charitable gifts, state and local taxes and more.

But the standard deduction for separate filers is $12,950, which is easier to exceed, Wilson said. If both spouses have significant itemized deductions while still falling below $25,900, filing apart may make sense.

There’s one caveat, however: You can’t mix and match, Pikary said. Both spouses must itemize or take the standard deduction on their separate returns, which may not provide equal benefits.

While filing separately may seem better in some scenarios, there are other trade-offs to consider.

For example, separate filers typically can’t make Roth individual retirement account contributions because the modified adjusted gross income limit is $10,000.  

The IRS also blocks or limits other write-offs for separate filers, such as the earned income tax credit, education tax credits, the student loan interest deduction and more, Pikary said.

“If you go down that route, you could be losing out on potential tax breaks,” he added, noting that it’s critical to run an analysis both ways to figure out the best choice.