Using the status married, filing separately on a tax return is appropriate for couples who want to keep all of their financial records separate, including their income and expenses.
However, if you chose to file separate tax returns, you may not miss out on important deductions and credits that are only available to married couples who file jointly. Generally, its more work for each party to file separately, as you have to fill out two different tax returns. In some situations, though, it may be beneficial to file separately.
If either you or your spouse has a significant amount of deductible expenses, you may want to file separate tax returns to claim the expenses. In order for the expenses to be deductible, they have to be greater than a specific percent of your adjusted gross income. For example, a taxpayer with an AGI of $50,000 who files separately from their spouse can deduct a $7,500 medical expense because its 15% of their AGI.
If that same taxpayer filed together with their spouse adding $30,000 to their combined AGI , that sam medical expense isn’t deductible because it is only 9.375% of their AGI.
If your spouse owns a business, you may want to file separately if you’re not comfortable combining your finances with your partner’s business. Filing jointly can make you responsible for any audits, interests, taxes, and fines from your spouse’s business.
In these situations, the IRS allows you to claim Innocent Spouse Relief for when an action is taken on your spouse’s business which you were unaware of. You can also claim Injured Spouse, which offers relief if your spouse has unpaid child support or taxes, and you wish to claim your portion of your tax refund.
If you think your spouse owes money to the IRS and you want to protect your own finances, you probably should file separately. Howeer, by doing so, you may miss out on many benefits allotted to married couples who file jointly. You should calculate your tax return both ways, and file under the status that nets you the best tax savings.