Most married couples pay less tax filing jointly than filing separately. Filing separately is usually chosen for reasons of liability rather than tax: when one spouse does not want to be responsible for the other’s return. It gives up several credits and deductions, so the only reliable way to tell is to work out the tax both ways before deciding.
What a joint return means
The misunderstanding is that on a joint return, each spouse is responsible for their own half. Each is responsible for all of it.
When you file jointly, both spouses are liable, jointly and individually, for the tax and any interest or penalty on the return. If one spouse does not report income correctly, both may be responsible for the extra tax, even if all the income was the other spouse’s. That responsibility can continue after a divorce, whatever the divorce decree says.
There is relief for a spouse who did not know about an error, through innocent spouse relief and related provisions, but it has to be requested, and it is not automatic.
What filing separately gives up
Filing separately is not the same as filing as single. A married person filing separately faces special rules, and they mostly cost money:
- The tax rates are generally higher at the same income.
- The education credits and the student loan interest deduction are not available.
- The child and dependent care credit is not available in most cases.
- The earned income credit is available only with a qualifying child and under certain other conditions.
- The capital loss deduction limit is 1,500 dollars instead of 3,000.
- If one spouse itemizes deductions, the other cannot claim the standard deduction.
Several other credits are reduced at lower incomes on a separate return. How the standard deduction and itemizing compare is covered in when itemizing still wins.
When filing separately is the right answer
We rarely recommend filing separately for tax reasons. Occasionally it helps, for example where one spouse has large medical expenses against a small income, but that is the exception, and it has to be calculated rather than assumed.
The usual reasons are not about tax:
- One spouse does not trust the other’s income or deductions, or does not know what they are.
- The couple is separating, and neither wants to be tied to the other’s return.
- One spouse has a tax debt and the other does not want a refund taken to pay it.
In each case the tax cost of filing separately is real, and it should be accepted knowingly, with the difference worked out in dollars.
When one spouse is a nonresident
A married couple where one spouse is a nonresident alien has a choice the others do not. The couple can choose to treat the nonresident spouse as a US resident and file a joint return.
That can reduce the tax on the US spouse’s income considerably. The cost is that the nonresident spouse’s worldwide income then goes on the US return, and the choice stays in effect for later years until it is ended. For a spouse with significant income abroad, joint filing may cost more than it saves, and ending the choice later has its own consequences.
So both versions need to be modeled before deciding: the joint return with worldwide income, and the separate return. How residency itself is decided is covered in resident, nonresident, or dual status in your first year, and how income from abroad is taxed once it is on a US return in foreign income after you become a US resident.
Changing your mind
The choice can be changed in one direction only.
If you filed separately, you can switch to a joint return by amending, generally within 3 years from the due date of the separate return, not counting extensions. If you filed jointly, you cannot switch to separate returns for that year once the due date has passed.
That asymmetry is a reason to file separately if you genuinely cannot decide by the deadline. It is a much weaker reason than it sounds, because the joint amendment has to be agreed by both spouses later.
How to decide
Work out the tax both ways, federal and state. Then weigh the difference against the liability question, which is not measured in dollars. Preparing both versions and explaining the difference is part of an individual return.