Are you considering filing a Married Filing Separately (MFS) tax return? It’s a popular option for couples who don’t need to file jointly. But there are some changes that come with filing MFS status. Here’s an overview of the tax advantages and reductions you should know about before making your decision.
Advantages
Filing Married Filing Separately offers a variety of advantages, such as the flexibility to apportion income and deductions between spouses, the potential for lower taxes for each spouse when taxed separately, protection from joint liabilities on past due taxes or other debts of the other spouse, and relief from future liabilities of the other spouse. Additionally, some deductions may still be available under the MFS filing status, such as medical expenses. Understanding these advantages can help couples make informed decisions to get the best outcome when filing their return.
Reductions
First, you won’t qualify for some deductions and credits that are available when filing jointly, such as the student loan interest deduction, child and dependent care credit, earned income tax credit (exceptions may apply), adoption exclusion or American Opportunity or Lifetime Learning Credit.
The standard deduction is also reduced to half of the joint amount when filing MFS status. You can only claim half of the child tax credit, retirement savings credit, and capital loss deduction up to $1500.
Finally, if your spouse itemizes deductions on their return, you must do so as well even if MFS status is selected.
Filing a Married Filing Separately doesn’t always make sense for couples but it may be necessary in some cases. Knowing the tax advantages and reductions that come with MFS status can help you make an informed decision, so you get the best outcome when filing your return.
If you have any questions about choosing the right filing status for your financial situation, reach out to a qualified tax professional for advice. They can help guide you through the process.
*** This article is for informational purposes only and does not constitute tax, legal, or financial advice. Before making any decisions related to taxes, please consult a licensed CPA, Enrolled Agent or other qualified professional. ***
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