I’m Married, but I Filed Separately This Year: Here’s Why

Laura Beck

Sun, Mar 17, 2024, 8:00 AM 5 min read

Getting married comes with many changes, including how you file your taxes. While most married couples file their taxes jointly, there are some instances where it makes more sense to file separately. Filing separately while married has pros and cons to consider before making your decision. Depending on your situation, this can be a smart move.

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For Adam Koprucki, founder and CEO of Real World Investor, filing separately from his wife is the best possible move for him. GOBankingRates also spoke to other financial experts for their advice on different circumstances that might make this a good idea.

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My Wife Has Significant Loans

The key factor in Koprucki’s case is student loan debt. His wife’s loans mean that filing separately lowers her repayment amount. Federal student loans base your monthly payment on your income and family size. If Koprucki filed jointly, his income combined with his wife’s income would be used to set loan payments. Filing separately results in a lower monthly payment.

“My wife has federal student loans,” said Koprucki. “If we filed jointly, our income would be combined, and her loan payment would go up significantly. We don’t have kids yet, so we don’t have to worry about losing out any tax benefits from that.”

Combining incomes on a joint return can negatively impact student loan payments for some borrowers. Consider running the numbers both ways to see if filing individually could provide student loan relief.

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Other Reasons Spouses May Want To File Separately

Aside from student loan debt, there are other scenarios in which filing separately may make the most sense for a married couple.

One Spouse Has Unpaid Tax Debt

If your spouse is delinquent on past tax bills or has other IRS issues, filing together opens you up to liability for their tax debts. In most cases, filing separately shields you from responsibility for taxes your husband or wife owes from previous years. This prevents collection of their tax debt from impacting your refund or assets.

“One scenario that makes sense that is often not discussed is if one spouse will owe a substantial amount of taxes that can’t be paid,” said Frances Anne Tomes, Esq. of Tomes Law Firm, PC. “Say a 1099 contractor who never paid taxes or someone who borrowed early from a 401(k) plan. If they file separately, the spouse does not have to worry about being garnished or levied for the debt, whereas if they filed jointly, the spouse’s income and separate assets would be subject to garnishment, levies and liens, because it has now become a joint debt.”

Even if you did everything right, if your spouse owes back taxes, you could have your refund seized or assets put at risk. Filing separately contains the liability, so only your spouse is accountable to the IRS for their obligations. This can provide critical financial protection if your partner has outstanding tax issues.

You Want To Avoid Being Hit by the Marriage Penalty

Some married couples pay more in taxes by filing jointly than they would as two single taxpayers. This so-called “marriage penalty” causes some couples to owe more in taxes by filing jointly than they would as two single filers.

This is often the case when spouses earn comparable salaries. Their combined income on a joint return pushes them into a higher tax bracket that wouldn’t apply if they filed as individuals. Filing separately avoids the marriage penalty and allows each spouse to use the single tax brackets, which are slightly wider than the brackets for married couples filing jointly.

You Have Concerns About Divorce

Many marriages end in divorce or separation. It’s common for partners who anticipate divorce to file separate returns to establish financial independence. This simplifies dividing assets and liabilities if you split. It also ensures you and your future ex have autonomy over your own tax situations moving forward.

Reevaluate as Your Finances Change

Filing separately often comes with a higher tax bill, which can outweigh the benefits over time. If your financial situation changes, reevaluate whether filing individually remains the right choice.

“I have a client that… does not combine finances with her husband, and he has a lot of debt,” said Heather Courtney Quinn, wealth management advisor at Northwestern Mutual. “Once her salary doubled, we calculated how much money she was losing — paying roughly $40,000 in extra taxes — and recommended that she should consider filing jointly. We live in California, which is a community property state… so he has a right to part of the money that she is earning during the marriage, anyway. Furthermore, the thresholds for the highest tax bracket start lower when you are filing separately.”

Filing separately may shelter you from a spouse’s finances, but over time, it could become an increasingly expensive choice. Add up the potential lost savings to reveal when you may want to switch to a joint return.

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