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FAMILY TAX TOPICS

How Filing Separately or Jointly Impacts Married Couples Taxes

Jo Willetts, EA Director, Tax Resources Published On November 18, 2020

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Filing your taxes might not be the first thing that comes to mind after getting married, but couples should know that marriage has an impact on your filing status options and how your income taxes are calculated. 

There are five filing statuses for taxpayers: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Children. Below we explore the differences and benefits of the two options for married taxpayers: Married Filing Separately and Married Filing Jointly. 

What’s the difference between filing jointly and filing separately?

Marital status is determined by whether or not you’re married on the last day of the calendar year, but you don’t have to live with your spouse to file with either status. The most common filing status for married couples is Married Filing Jointly, where married couples file a tax return together. If your spouse passed away during the year for which you are filing your tax return, you may still file as Married Filing Jointly.

Taxpayers who file Married Filing Jointly not only receive the largest standard deduction and have a higher maximum income amount for the phaseout of many tax benefits, they also have the lowest overall taxes on their income.

But also keep in mind that taxpayers who file as Married Filing Jointly are both responsible for the taxes owed that tax year and cannot amend a joint return as to two separate returns once the filing due date (without extensions) has passed.

Married Filing Separately means each person claims their own income and deductions on their own separate tax returns. Married Filing Separately means only the individual on the tax return is liable to the IRS for any tax bills and errors on the return. This filing status has the highest taxes, least allowed credits and deductions, and can make more of the income taxable in many circumstances, such as Social Security benefits.

If you file as Married Filing Separately the standard deduction is zero for one spouse when the other itemizes their deductions. Taxpayers who file separately can later amend to file a joint return for up to three years past the due date of the tax return. The IRS suggests that taxpayers prepare their taxes both ways to see which filing status is better for them before officially filing their return.

Reasons for filing separately

Taxpayers who choose to file as Married Filing Separately instead of Married Filing Jointly may benefit if it results in less tax owed than if they file a joint tax return. You can also use this status if you and your spouse want to be responsible only for your own income tax.

If you and your spouse don’t file jointly, you still must file your income taxes and file as Married Filing Separately; unless you qualify for Head of Household status.

NOTE: Taxpayers from community property states have special rules concerning the division of marital income.  If you live in one of these states, filing separate returns may not be as easy and straight forward.

When do I have to use the Married Filing Separately filing status?

You must use the Married Filing Separately Filing Status if you are:

  • Married as of midnight December 31 of a tax year and,
  • Your spouse refuses to file a joint return, or
  • Your spouse is a nonresident alien

 

Married Filing Separately 2020 tax brackets (for taxes due April 15, 2021)

Tax Rate Income for Married Filing Separately

10%

 $0 to $9,875

12%

$9,876 to $40,125

22%

$40,126 to $85,525

24%

$85,526 to $163,300

32%

$163,301 to $207,350

35%

$207,351 to $311,025

37%

$311,026 or more

Reasons for filing jointly

  • When you and your spouse use the Married Filing Jointly filing status, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions for the tax year.

  • One of the biggest benefits of filing Married Filing Jointly is your ability to lower your combined taxes. Your standard deduction might also be higher, and you may qualify for other tax credits and deductions that are not available when married filing separately.

  • When you file as Married Filing Jointly, you are both responsible for all income and deductions on the tax return, even if only one spouse earned all the income.

What are the rules for filing jointly?

You may claim the file status of Married Filing Jointly if:

  • You are married as of midnight December 31 of the applicable tax year, and
  • You and your spouse agree to file and sign a joint tax return

 

Married Filing Jointly 2020 tax brackets (for taxes due April 15, 2021)

Tax Rate Income for Married Filing Jointly

10%

 $0 to $19,750

12%

 $19,751 to $80,250

22%

 $80,251 to $171,050

24%

 $171,051 to $326,600

32%

 $326,601 to $414,700

35%

 $414,701 to $622,050

37%

 $622,051 or more

Marriage Penalty vs Marriage Bonus

Some couples that file Married Filing Jointly might experience what’s known as a “marriage penalty” or a “marriage bonus” depending on the total of their combined income. According to the IRS, more people are likely to experience a marriage bonus than a marriage penalty.

A penalty occurs when the couple’s combined income puts them in a higher tax bracket. A marriage bonus occurs when one person’s income is lower than the others, basically “evening” the combined income, and keeps the couple in a lower tax bracket. 

A marriage “penalty” may occur when one spouse earns less income than the other and has very high medical expenses. Marriage penalties are also more common if the couple has similar incomes, while a marriage bonus is more common if the couple has very different incomes.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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