A common question married individuals have for their CPA is, “Will filing separately help my tax situation?” The answer to this question like many other tax questions is “it depends.”
As a married couple you have the option to file using the status “married filing jointly” or “married filing separately.” As a personal preference you and your spouse may prefer to keep your finances separate thus electing to file separately; however, you should keep in mind that there are many advantages to filing a joint tax return.
Married filers have lower tax brackets (see 2014 tax brackets below), higher standard deductions, higher income phase-out ranges for IRA deductions and receive the following tax benefits:
With that being said, do keep in mind that in certain situations filing separately may be beneficial for both you and your spouse. For one if you file separately you are not responsible for your spouse’s tax liabilities nor the accuracy of your spouse’s tax return. If you suspect your spouse is evading taxes or taking unreasonable deductions it may be a good idea to file separately. Another reason to file separately is when there is a large discrepancy between the incomes of the spouses. In non community property states this may ultimately result in a combined lower tax situation.
As one can see there are many advantages to filing jointly and only a few reason to file separately. However, before making a decision on which filing status is right for you it is best to consult with a tax advisor. As a best practice we always recommend calculating your tax return using both filing statuses in order to examine the results prior to making a final decision. This process will help you select which strategy works best for you, your spouse, and of course your pocket.
|Tax Rate||Married Filing Jointly||Married Filing Separately|
|10%||Up to $18,150||Up to $9,075|
|15%||$18,151 to $73,800||$9,076 to $36,900|
|25%||$73,801 to $148,850||$36,901 to $74,425|
|28%||$148,851 to $226,850||$74,426 to $113,425|
|33%||$226,851 to $405,100||$113,426 to $202,550|
|35%||$405,101 to $457,600||$202,551 to $228,800|
|39.60%||$457,601 or more||$228,801 or more|