Why Some Married Couples File Taxes Separately
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What is the main topic discussed in this episode?
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Here's your money briefing for Tuesday, March 7th.
What is driving the recent rise in married couples choosing 'married filing separately'?
I'm J.R. Whelan for The Wall Street Journal. Before plugging numbers into their tax return, most people indicate if they're a single filer or a married couple will check married. But some married couples are choosing to file their returns separately.
Well, it's not very common, the married filing separately category. So it's not many people, but it's the only one that's been growing, and it's gone up about 50% in the last decade.
So what are the pros and cons of choosing married filing separately on your tax return? We'll talk to Wall Street Journal tax reporter Laura Saunders after the break.
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How common is the 'married filing separately' filing status and how has it changed over time?
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More and more married couples are checking the married filing separately box on their tax return. So what are the benefits and what are the pitfalls to watch for when choosing that option? Let's bring in Wall Street Journal tax reporter Laura Saunders for some answers. Hey, Laura, thanks for being with us.
Thanks so much for having me.
So, Laura, how common is this, married couples filing separately?
Well, it's not very common.
Does the IRS treat married filers who file separately as two single taxpayers?
There are about 160 million tax returns, and there are about 4 million people, that's 2 million couples, who file separate tax returns, that is, use the married filing separately category. So it's not many people, but it's the only one that's been growing, and it's gone up about 50% in the last decade. Now, some of that in like 2019 and 20 had to do with people filing separately to qualify for pandemic benefits. However, it had been going up before that.
So how does the IRS view people who file separately? Are they considered individual filers?
Well, let's stop right there for a minute. It's not up to the IRS. I think we all need to remember... Oh, you always school me on this. Yes, exactly, that Congress makes the tax law. The IRS enforces it. And so how does the tax law view... married filing separately taxpayers? Are they like two single people? The answer is no. It's a complicated status to choose, and it may cost you or it may bring you a benefit, and there are different reasons for doing it, but you remain married in the eyes of the law. You're just filing separate tax returns.
You know, when you look at the tax return, you see single and married. They probably don't even know this married filing separately option is there.
Well, I think a lot of people don't know it's there, but other people see it on the return and they say, what is this? And in fact, some CPAs say this is the most asked question. And that's because married couples may not choose to file separately, but they want to know what it means.
Okay, I want to go into all the pros and cons of doing this in just a moment, but is this option of filing married but separately, is this available only on the federal return?
No.
How do state tax rules and community property laws affect couples who file separately?
It's very available with many states, and you need to pay attention to the state tax implications because in some states, you cannot file separately for the state unless you filed separately for the feds.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:36
2
What is driving the recent rise in married couples choosing 'married filing separately'?
0:36–1:25
3
How common is the 'married filing separately' filing status and how has it changed over time?
1:25–2:21
4
Does the IRS treat married filers who file separately as two single taxpayers?
2:21–4:07
5
How do state tax rules and community property laws affect couples who file separately?
4:07–5:10
6
When does filing separately sever joint tax liability and who benefits from that protection?
5:10–7:02
7
How can filing separately lower payments for student loan income‑driven repayment plans?
7:02–9:46
8
What tax breaks do married couples give up by filing separately (student loan interest, credits, IRAs)?
9:46–11:01
Speakers
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