Taxes 101: What Married Tax Payers Filing Separately Should Consider (part 1)

 

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Yes, married taxpayers also have the option of filing separate returns. The “married filing separately” (MFS) status provides fewer tax benefits, however. You’ll be disqualified from claiming several advantageous deductions and credits, and your income phaseout limits for other deductions will be more prohibitive.

Many professionals advise doing your taxes both ways to figure out which is the most advantageous for your personal situation.

The Benefits of Filing Separately: You’re Both Separately Liable

Both spouses are “jointly and severally liable” for the accuracy of a jointly filed tax return, and they’re also jointly and severally liable for any resulting taxes.

An exception exists if one spouse can prove a case for innocent spouse relief. This establishes that he/she had no knowledge of the other’s misstatement of tax information.

But you don’t have to deal with all this if you file separately. You’re automatically responsible only for the accuracy of your own tax return when you file this type of return, and you’re only responsible for paying the taxes due on income you personally earned.

You might prefer this arrangement if your income is $20,000 while your spouse earns six figures. Filing jointly would put you on the hook for paying some significant taxes resulting from his far superior income.

Your filing status also affects the tax rates that are used when calculating your federal income tax. The following tax rates are in effect for those who are married but file separate returns in 2019 for tax year 2018.

 Tax Rate  Taxable Income Is   But Not More Than 
 10 percent  $0  $9,525
 12 percent  $9,526  $38,700
 22 percent  $38,701  $82,500
 24 percent  $82,501  $157,500
 32 percent  $157,501  $200,000
 35 percent  $200,001  $300,000
 37 percent  $300,001 or more

These tax rates and brackets are significantly different from what they were in 2017.

These brackets are the same as those that apply to single taxpayers…with one major exception. The 35 percent tax bracket covers income up to $500,000 for single taxpayers, but those who are married and file separately hit the highest tax bracket of 37 percent at incomes of just $300,001, a significant $200,000 difference.