Most married couples file joint federal income tax returns, but there are a few instances in which it may make sense to file separately. USAA outlines three reasons you may want to file independently:
1. To take advantage of deductions
Medical expenses must exceed a certain percentage of income to be deductible. If a spouse with significant medical expenses could more easily surpass the threshold based on his or her adjusted gross income, it may be wise to file separately to save. For more information on medical and dental expenses, review IRS Publication 502 "Opens in a New Window". See note 1 There are also special rules for residents of community property states, so be sure to check IRS Publication 555 "Opens in a New Window". See note 1
2. To qualify for a lower tax rate on capital gains and dividends
If one spouse is earning all the capital gains and dividends, filing separately could mean a lower tax rate on that income. But it would depend on several factors including that spouse's income. There's more information available from the IRS on investment income and expenses "Opens in a New Window". See note 1
3. To potentially protect yourself from incorrect filings
Filing jointly generally means being responsible for the information reported on the joint tax return. In certain situations, one spouse may be relieved of joint responsibility for tax, interest and penalties on a joint return for items that the other spouse incorrectly reported on the return. However, if one spouse has reservations about the other spouse's reported income or other information attributable to that spouse, they may want to consider filing separately.
It's important to consult a tax professional for advice based on your own circumstances before choosing how to file. For more guidance on exemptions, standard deduction and filing information, review IRS Publication 501 "Opens in a New Window". See note 1
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