Recently Married? Is it Better to File Jointly or Separately?

Peter Alizio Income Tax

Income Tax Return – MFJ vs MFS 

This is a question every tax professional will get asked 5+ times a week during tax season.  I just got off the phone with my recently married friend (the wedding was nice) who inquired if it would be beneficial to file jointly or separately.  I have been getting asked this question over and over again, the MFJ vs MFS question is clearly one of interest, so I have decided to write about it.

Married Filing Separately or Jointly?

I am not going to go into the technical rules regarding certain deductions and credits that are not available if you are filing separately (married filing separately).  The only way to know which filing status is financially beneficial is to run an analysis. Creating a MFJ vs MFS analysis has never been easier thanks to commercial tax software.  All you have to do is input and code all tax documents that belong to the husband as “taxpayer” and all tax documents that belong to the wife as “spouse” and the tax software will do the rest.  That is how it should be done – see image below.

 

* This MFJ vs MFS Analysis can be produced using Drake Tax Software.

Now there are times when taxpayers may want to file separately regardless of the MFJ vs MFS analysis above:

  • Back Taxes – When one spouse owes back taxes to the IRS. In this scenario, any federal or state tax refund will not be paid out but applied to the back taxes owed by one of the spouses.  If both spouses filed separately, maybe one of them could receive a refund.

 

  • Large Tax Balance Due – If one spouse is self-employed and not making quarterly estimated tax payments. In this scenario, there will be a large balance due with the tax return since money has not been withheld throughout the year.  Under these circumstances, it may be better to file separately because filing a joint tax return would make both spouses jointly and severally liable for the balance due on the tax return.

 

  • Student Loans – There are some income-based student loan programs that payments are determined based on the individual’s tax return. In this scenario, filing separately may create a lower student loan payment and improve personal cash flow.

 

  • Privacy – If one spouse is running for public office it is customary for tax returns to be released to the public. In this situation, it may make sense for privacy and/or political reasons to file separately i.e. then-Senator John Kerry filed separately from his wealthy wife Teresa Heinz.

 

I hope this article answers the question is it better to file married filing jointly or separately.  If you have any further questions or need assistance with income tax compliance, please contact me.

is a CPA and Tax Attorney.  When he is not solving IRS and NYS tax problems he likes football and playing amateur chef.  He also enjoys meeting new people, preferably over coffee, whiskey or cigars.