Married Filing Separately is Not the Same as Filing as Single

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A common misconception I run into is the assumption among married couples that, if they file separately, it’s the same as filing as two single people.

There was once a time when this was true. Unfortunately for people who think this in 2015 … that time was more than 65 years ago.

If you go back and read my “History of Marriage in the Tax Code,” you’ll learn that there was no difference between filing as single and filing as married filing separately until 1948.

Ever since then, big differences have existed. Almost all of these differences favor a filing status of single. Consider this partial list:

  • Single people can claim a deduction for student loan interest; people filing separate tax returns cannot.
  • Phaseouts, limits and caps are almost always less advantageous when filing separately (such as for the cap on rental losses and taxation of Social Security benefits)
  • The earned income credit and the credit for childcare costs are not available when filing separately
  • The lower parts of the tax bracket for single and married filing separately are the same, but the 28% tax bracket kicks in at a lower income level for married filing separately
  • When filing separately, both spouses must either: each claim itemized deductions or each take the standard deduction. Two single people can take whichever deduction benefits them the most.

In my experience, filing separately is usually not a good option for most married couples. There are a few exceptions:

  • When one spouse has an exceptionally high amount of itemized deductions subject to AGI limits (such as medical expenses or miscellaneous itemized deductions)
  • When both spouses have no kids and income in 6 figures, it can sometimes be beneficial to file separately
  • When a couple has kids and their joint income is above the joint phaseout level for the child tax credit, it can sometimes be beneficial to file separately if each spouse’s separate incomes falls just right.

And remember: for tax purposes, marital status for the year is determined by your marital status on December 31st.

And if you’re considered legally married on December 31st, you can’t just say “hey, I’m single!” when you file your taxes.