TurboTax tips for married couples: Should you file jointly or separately?
0
Advantages of filing jointly
- Earned Income Tax Credit
- American Opportunity and Lifetime Learning Education Tax Credits
- Exclusion or credit for adoption expenses
- Child and Dependent Care Tax Credit
Consequences of filing your tax returns separately
- In 2019, married filing separately taxpayers only receive a standard deduction of $12,200 compared to the $24,400 offered to those who filed jointly.
- If you file a separate return from your spouse, you are automatically disqualified from several of the tax deductions and credits mentioned earlier.
- In addition, separate filers are usually limited to a smaller IRA contribution deduction.
- They also cannot take the deduction for student loan interest.
- The capital loss deduction limit is $1,500 each when filing separately, instead of $3,000 on a joint return.
When you might file separately
- For example, if you or your spouse has a large amount of out-of-pocket medical expenses to claim and since the IRS only allows you to deduct the amount of these costs that exceeds 10% of your adjusted gross income (AGI) in 2019 (7.5% of AGI in 2017 and 2018), it can be difficult to claim most of your expenses if you and your spouse have a high AGI.
- For example, if you have $10,000 in medical expenses and made $50,000. That would meet the 10% threshold ($10,000 ÷ $50,000 = 20% of your income).
- Whereas, if together you make $105,000, this would disqualify you from claiming these medical expenses ($10,000 ÷ $105,000 = 9.5% of your income).
- Filing separate returns in such a situation may be beneficial if it allows you to claim more of your available medical deductions by applying the threshold to only one of your incomes.