Taxpayers who are married have the option to file a single return or to separate their income and deductions and file separately. It’s likely simpler to file jointly if one spouse earns the majority of the household income. However, in situations where both parties earn similar amounts of income, filing separate returns may prove to be the better option for the couple, as their tax liability may lessen. It’s worthwhile to figure out the entire return using both methods to determine which is most beneficial.
In most cases, couples who file separately are taxed at a higher rate. The way this can benefit couples is that taking a multitude of deductions can actually increase savings at tax time if you file separately. Doing so allows you to claim a greater amount of medical expenses, casualties, and other expenses, because your adjusted gross income requirement is lowered. In most cases, the rates for filing separately and jointly are close, though if one spouse earns a large portion of the couple’s income, the rates may vary.
Separate returns are a great option for a taxpayer who doesn’t want to be responsible for their spouse’s tax liability. In doing so, you aren’t held accountable for interest, penalties, taxes, misrepresentation of income amounts or ineligible deductions. If you do file separately, your spouse is also required to do so. The same is true for whether or not you chose to itemize your deductions. If your spouse takes the standard deduction, $6,300 for 2015, then so must you. Likewise, if you chose to itemize using a Schedule A of Form 1040, then your spouse is required to as well, even if the total is less than $6,200.