When it comes to filing your tax refunds, most married people file jointly. In most cases, filing jointly means more tax incentives, and thus, works for most couples. However, there are a few instances where you may want to file separately.
A large amount of medical expenses
One reason you may want to file separately is that you have a large amount of medical expenses. In this case, if you wanted to deduct your medical expenses, they would have to be over 10% of your adjusted gross income (AGI). If you were to file separately, you’d likely be able to take this deduction because your medical expenses would exceed your AGI.
Reporting employee business expenses
Along the same lines, if you’re trying to qualify for employee business expense deductions, then your expenses need to be at least 2% of your income. Once again, it’s a lot easier to meet this requirement when you’re only looking at one person’s income instead of two.
You’ve faced casualty loss.
If you’ve dealt with damage to your home or vehicle, this is another instance where you’re more likely to qualify for this deduction when it’s based solely on your income versus both spouses.
You earned capital gains and dividends.
Yet another reason to file separately is that you’ve earned capital gains and dividends. Here, if your spouse makes more money than you do, then it makes more sense financially to file separately because you’ll be taxed at a lower rate versus the alternative.
You want to protect yourself legally.
Unfortunately, many spouses file separately because they don’t want to be legally responsible for their spouse’s tax situation, especially in the event that one spouse may be doing something illegal or shady in relation to his or her income.
Your spouse owes the government money.
If your partner owes back taxes or has defaulted on federal student loans, filing separately means that you won’t be held responsible for their debt. Plus, the government won’t hold onto your tax refund because of it.
You’re getting a divorce.
Moreover, if you’re facing a pending divorce, then filing separately tends to make more sense. This is especially true if you’d likely have to split the joint return, which could lead to additional drama that no one needs.
You want to file as Head of Household.
Lastly, if you and your spouse are currently separated or haven’t lived together for the last six months, then you may want to be able to maximize the Head of the Household deduction, especially if you have dependents and maintain the home where the dependents live in.
Ultimately, if you find yourself in any of the situations mentioned above, then the best option for you is to file separately. That said, if you have any questions or concerns about the above scenarios, speak with your tax professional or CPA to go over your options in detail.