Married Filing Jointly vs Separately: Which is Better

Filing jointly and separately both have advantages and disadvantages. The best choice for your situation may not be the best choice for the next married couple. Choosing the most appropriate filing status is important to maximize your benefits or limit liability. Read on to learn more about the benefits of these two filing statuses.

Key Takeaways 

• The IRS offers tax deductions to taxpayers married filing jointly that are not available to taxpayers married filing separately.
• When you file jointly, you share equal liability for any penalties and taxes owed.
• There are more potential credits and deductions available to taxpayers who file jointly.
• If filing separately, you must both choose the same filing method: either take the standard deduction amount or itemize deductions.

Table of Contents

• Married Filing Jointly Overview
• Married Filing Separately Overview
• Married Filing Separately vs Jointly: Factors To Consider Before Making a Decision
• Is It Better To File Jointly Or Separately?
• Simple Tax Preparation with FreshBooks
• Frequently Asked Questions

Married Filing Jointly Overview

To be eligible for the married filing jointly status, you need to be married in the tax year. You are considered to be married in a tax year if:  

• You were married on the last day of the tax year, or 
• Your spouse died during the year, and you have not remarried

You and your spouse can file jointly if, on the last day of the tax year, you:

• Were married and lived together
• Were married and living apart but were not legally separated
• Were common law married and the marriage has not been dissolved, such as by death or divorce

Tax Benefits of Filing Jointly

There are more benefits to filing taxes jointly than any other filing status. You can select this status even if your spouse has no income or deductions. The IRS offers tax deductions not available to taxpayers who file as any of the other filing statuses to encourage married couples to file jointly. Some of the benefits include:

• Only have to file one return to report your combined income and to deduct combined allowable expenses.
• A bigger tax refund or a lower tax liability than when filing separately.
• A lower tax bracket if one spouse earns significantly more money than the other
• Higher thresholds for charitable contributions, retirement savings contributions credit, and child tax credit.
• A jobless spouse can have an IRA.

Cons of Filing Jointly

Though there are fewer, there are some cons to filing jointly rather than separately. These include:

• Shared and equal liability between spouses for any tax, interest, or penalty owed, even if the other spouse earned all the income.
• Overpayment may be used to pay the past-due amount of your spouse’s debts, including federal tax, state income tax, child or spousal support payments, or a federal nontax debt, such as a student loan.
• If you or your spouse incurred significant medical bills, jointly filing may limit your ability to go over the 7.5% threshold to deduct the medical expenses.

Married Filing Separately Overview

To have the married filing separately status, you have to be a married taxpayer and fill out your individual tax returns to report only your income and deductions to the Internal Revenue Service. Filing taxes separately status is for married taxpayers who are either: 

• Choosing to file separate returns, or 
• Cannot agree to file a joint return 

These rules do not apply in community property states. 

Tax Benefits of Filing Separately 

Although the IRS puts filing separately as the least beneficial of all the tax statuses, there are some benefits, such as: 

• Filing separately limits liability for your spouse’s tax errors and penalties.
• Spouses earning high incomes may come out better if they file separately.
• It can help reduce the income level that determines student loan payments.
• You can submit itemized claims like unreimbursed medical expenses that exceed 7.5% of your adjusted gross income, state income tax, property tax you paid alone, mortgage interest payment you paid alone, and half of the loss, subject to the deduction limits, resulting from a federally declared disaster on a home you own as tenants by the entirety.

Cons of Filing Separately

The major drawback is that the tax rate is often higher than on a joint return. But that’s not the only drawback. When you file separately:

• Both taxpayers report their income and half of any income described by state law as community income if they live in a state with community property and file separately.
• You cannot submit a claim for the child and dependent care credit, education credits, and certain other benefits and credits.
• Some credits and deductions, like the retirement savings contributions credit, are reduced at income levels that are half those for filing a joint return.
• Both taxpayers must submit itemized deductions on their return, or they both take the standard deduction. One spouse cannot submit itemized deductions if the other submits a standard deduction.

Navigating the rules and regulations of tax credits and deductions can be easy when you have support. Learn how FreshBooks can take the pain out of tax preparation with this short video.

Married Filing Separately vs Married Filing Jointly: Factors To Consider Before Making a Decision

Choosing to file joint or separate tax returns as a married couple is a crucial choice. There are several factors to consider before making a decision.

Tax Percentages Comparison

For the 2023 tax year, the marginal tax rates are as follows:

• 10%  of taxable income under $11,000 filing separately ($22,000 filing jointly)
• 12% for incomes over $11,000 filing separately ($22,000 filing jointly)
• 22% for incomes over $44,725 filing separately ($89,450 filing jointly)
• 24% for incomes over $95,375 filing separately ($190,750 filing jointly)
• 32% for incomes over $182,100 filing separately ($364,200 filing jointly)
• 35% for incomes over $231,250 filing separately ($462,500 filing jointly)
• 37% for incomes over $346,875 filing separately ($693,750 filing jointly) 

The marginal tax rate does not apply to your total income, only the corresponding brackets. For example, if you make $44,900, the first $11,000, your tax rate is 10%. From $11,001 to $44,725, your tax rate is 12%, and the remaining $175 is taxed at the 22% rate.

Tax Deductions Comparison

Deductions are amounts you can deduct from your taxable income to lower the amount of taxes you owe. The result is your adjusted gross income. You can itemize your deductions or take the standard deduction rate.

For 2023, the standard deduction is $27,700 for married couples filing a joint return and $13,850 if filing separately. 

If you file separately, you must both choose the same deduction method. You must choose either the itemized or standard deduction. One of you cannot choose the standard deduction, while the other chooses itemized deductions.

It’s a good idea to calculate your tax return using the standard deduction rate and the itemized method, then use the more advantageous one.

Consider Tax Liability and Transparency

Talking about money and finances can be one of the most difficult conversations a married couple can have. It is an essential and necessary conversation. 

When you file jointly, you assume equal responsibility for taxes owed, debts, penalties, and other financial obligations or liabilities your spouse has incurred.

In case of an increased liability that you are not willing or able to take on, there is help. If you qualify, there is relief available for certain instances of liability when joint filing: innocent spouse relief, separation of liability, and equitable relief. 

If you have doubts about the transparency of your spouse’s financial situation, you should file separately. 

Is It Better To File Jointly Or Separately?

Unfortunately, there isn’t a concrete answer as to whether one or the other method is better. You can only make the best decision based on your individual situation and the information you have. To maximize your tax benefits, carefully assess your available tax breaks, credits, and deductions, calculate your tax return both ways and consult a tax professional if you have any questions. Though the overall deductions and credits are better for couples filing jointly, there is also a chance for significant liability. 

Simple Tax Preparation with FreshBooks

Choosing whether to file taxes separately or file taxes jointly can be a challenging decision for some couples. Whether you choose to file your income taxes separately or jointly, the process of preparing for your tax return is about the same. By saving and organizing all relevant and necessary receipts in an account book or digital log, you’ll be closer to an effortless tax return.

FreshBooks accounting software can track and categorize expenses to help you capture every eligible deduction. Try FreshBooks free by signing up today to see how easy tax filing can be!

FAQs about Married Filing Jointly vs. Separately

FreshBooks has summarized some of the frequently asked questions about filing your tax return as a married couple for quick reference. Have a look!

Who pays more, single or married filing jointly?

The two statuses have different criteria that can impact the overall tax burden. Couples who file jointly have a lower tax rate and pay lower taxes. However, a married person filing separately can access tax deductions that may not be available to a married couple. Spouses who are repaying their student loans or couples with one person being a high earner and the other being a low earner and having high medical bills.

What is the penalty for filing single when married?

Filing using the wrong status qualifies as Negligence or Disregard of the Rules or Regulations. The penalty for accuracy-related negligence is 20% of the portion of the underpayment of tax specific to the negligent act. In the case of a filing status, it could be considered a substantial understatement and apply to the total return.

Why would a married couple want to file separately? 

Married couples may file taxes separately for liability reasons or because their itemized tax deduction yields a greater return when filed separately. For example, if one spouse incurred significant health bills, their itemized deductions may be over the 7.5% threshold. If they filed jointly, they may not meet the threshold. Also, couples going through a divorce might want to file separately.

Can you be legally married but file separately?

Yes, filing separately is an allowable tax return filing option. By filing separately, you miss out on some of the credits and benefits available to joint filers, but you take on none of the risks of your spouse’s taxes, penalties, or debts.

How much does the average married couple get back in taxes?

The average married couple may not get anything back in taxes. However, by filing together, the average couple lessens their overall tax rate and pays less. They may qualify for tax credits like the Earned Income Tax Credit, Child and Dependent Care Credit, and the American Opportunity and Lifetime Learning Education Tax Credits.

Which filing status takes out the most taxes?

Depending on the individual’s situation, people using the married filing separately status generally pay the most taxes because certain deductions not being available to them. 

The IRS rates the status from most beneficial to least beneficial: married filing jointly, qualifying widow(er), head of household, single, and married filing separately. Even so, you may qualify for deductions specific to your situation that decrease your overall taxable income when filing separately. Talk to a tax pro to help you navigate the differences and help you choose the most advantageous filing status.

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