When Does Married Filing Separately Make Sense?

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Married Filing SeparatelyAfter the wedding, I started taking a closer look at the tax numbers and incorrectly concluded that the only time someone would ever file as “married filing separately” would be if one partner earned a whole lot and one partner earned not as much. The logic was that the lower earner wouldn’t be subject to the same tax rates as the higher earner and thus the difference would overcome the different tax brackets. The only correct assumption I made was that the lower earner wouldn’t lose access to any tax advantaged accounts, like Roth IRAs, because they’d still be over the limits for those types of accounts. I already gave out my hypothesis and my result (I was wrong and am now clueless as to why anyone would file separately if both options were available) but here’s what I did.

Hypothesis: Married Filing Separately shares more of the lower tax brackets as Single filers but you lose practically all of the favorable tax benefits that Single filers enjoy. The benefit of filing separately is if you have a significant disparity in income with the sum total above many of the tax beneficial limits. (this hypothesis is proven wrong)

2008 Tax Brackets

The analysis was using 2008 brackets but you can see the current tax brackets here.

Tax Rate Single Married Filing Jointly Married Filing Separately
10% Not over $8,025 Not over $16,050 Not over $8,025
15% $8,025 – $32,550 $16,050 – $65,100 $8,025 – $32,550
25% $32,550 – $78,850 $65,100 – $131,450 $32,550 – $65,725
28% $78,850 – $164,550 $131,450 – $200,300 $65,725 – $100,150
33% $164,550 – $357,700 $200,300 – $357,700 $100,150 – $178,850
35% Over $357,700 Over $357,700 Over $178,850

Three Scenarios

What happens with a couple earning $100,000 with one earner taking in $80,000 and one earner taking in $20,000?

  • Married Filing Jointly: $17,687.50
  • Married Filing Separately: $16,772 + $2,197.5 = $18,969.50 (correction)

That’s a difference of $2,802.50 but both individuals lose access to a Roth IRA (among other significant benefits).

What about a couple earning $200,000 with one earner banking $120,000 and one banking $80,000 would pay (this doesn’t take into account deductions):

  • Married Filing Jointly: $44,744
  • Married Filing Separately: $28,964.50 + $16,772 = $45,736.50

What!? It’s more to file separately… maybe the disparity has to be greater. What if a couple earned $400,000 with one earner banking $320,000 and one banking $80,000?

  • Married Filing Jointly: $58,787
  • Married Filing Separately: $49,402.5 + $16,772 = $66,174.5

Two Potential Reasons to File Separately

So, I tried to do more research and discovered this great article and according to William Perez, filing separately makes sense in two basic scenarios:

  1. “Filing separate returns makes the most sense when one spouse owes a significant amount of money, but the other spouse could get a refund.”
  2. “It also makes sense when one spouse is cheating on their taxes, and the other spouse doesn’t want to be involved.” (Nice!)

Let’s ignore scenario #2 because anyone who lets someone else knowingly cheat on taxes doesn’t really need to worry about their tax bill, they have bigger issues. With scenario 1, you have to be in such a small window, for both earners, such that the lower earner’s deductions will save them more than the higher earner loses by filing separately (as evidenced by our 80/20 example above). The 25% tax bracket starts at $32,550 for married filing separately but starts at $65,100 for married filing together! I suppose the numbers have to be in that range for this to make sense… but then you start giving up great benefits such as a Roth IRA, which is available if your total AGI is less than $156,000 when you file jointly but only $10,000 when you file separately! (plus, I don’t know if I’d classify someone earning $80,000 as someone who would owe a “significant amount of money,” hence my 120/80 and 320/80 examples)

Plus, if you read the article some more, there are so many headaches involved in filing separately (both have to take itemized or both take standard, state taxes are a pain in many states, etc.) that I can’t even imagine the strangely specific scenario in which filing separately truly makes both financial and psychological sense.

Why would you file separately if you could file jointly?

Hat tip to Ryan Waggoner for providing this Quicken post with some solid reasons for married filing jointly, the main financial reason happens to be in the blind spot of my analysis, itemized deductions.

(Photo: Sean Molin Photography)

{ 312 comments, please add your thoughts now! }

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312 Responses to “When Does Married Filing Separately Make Sense?”

  1. ben says:

    My wife and I have been separated for years now but we have never applied for separation papers.

    The mortgage for the house is in both our names and the utilities are in my name.

    My son and I moved out a couple years ago, letting my wife and daughter keep the house.
    The state irs agent tells me now I can’t file head of household even tho I haven’t lived with my wife for those years. She said because the utilities are in my name and the4 bills go to the house they count that as me living there.

    She is trying to force me to file married filing separate, which she told me with glee will knock me out of any earned income credit even tho I fully support my 11 year old son.

    I barely make $14,000 a year and the US Treasury is taking a paycheck each month ( for an old HUD loan )from me right now leaving me with around $600 to $700 a month to live off of.

    If she does that my taxes will increase and I’ll have to pay the state AND federal treasuries for 2008 and 2009.

    It seems the government does not care they will end up completely bankrupting me and putting my son and myself out on the streets.
    Do I have any hope at all or should i just go ahead and find somewhere for my son to live?

    • keiffer says:

      Ben, even though you seperated form your wife, and youhave a qualified persom (which is your son) live with you in your home and you paid half or all cost of keeping up the home,
      you are still considered to be married if you aren’t legally seperated.
      advice you should however consider to filed a joint return it come with more benefits deductables are higher

      • keiffer says:

        you can also consider to filing head of house hold, this can apply to you if you are not legally seperated.
        1. tax maybe lower
        2. eligible for earned income credit and other credit also,
        3. standard deduction is higher.

    • keiffer says:

      you can also consider to filing head of house hold, this can apply to you if you are not legally seperated.
      1. tax maybe lower
      2. eligible for earned income credit and other credit also,
      3. standard deduction is higher.

    • Anonymous says:

      Do you have rental receipts for the place that YOU live?
      Don’t believe everything tax agent tells you, check it for yourself.
      If a landord has the utilities in his name, and he has renters in the place——- does that prove that he also lives with them?

    • jose says:

      wow…. what a bitch.

  2. benny says:

    my spouse earns 65k a year and i earn 75k a year the house we live in she owns she has two kids we have 8 month old together we both claim married and zero on our w2 i insure my son how should we claim

  3. Alicia says:

    My husband and I got married this year and we both have children from previous marriages. However, he owes an extreme amount of back due child support and b/c of that debt his tax returns get intercepted by the state to pay his child support. I want to know is this a scenario where we should file married but seperate? Since my child lives with us I get to claim my child as a dependent on my return. How do I avoid having my portion of our tax return being intercepted for his child support?

    • keiffer says:

      married filing seperate isthis best thing for you in order to protect your returns

    • Anonymous says:

      Hello my husband filed joint in 09 and because our tax person said it was best. I’m a college student and lost of my aid. he makes over 90k a year and I make maybe 3,000 a year I’m a workstudy student. i have two kids from a previous relationship. we share one child together and he also has another son who lives with us. we have two houses and he claims his mom. but he pays childsupport for another kid. he is not backed. that gives us 7 dependent and two house. but i want to file separately because someone told me i might get my financial aid back. i just don’t know what to do.

    • You know who says:

      Hi Alicia – Have you ever considered, perhaps, forcing your husband to uphold his obligations and pay his child support bill, instead of figuring out ways to skirt the issue and help him shirk his responsibility? When you married him, his responsibilities became yours, and vice-versa.

      Not surprised. Sounds exactly like the man we all know and love. Keep on living those church ideals they teach you ever week, they’re working out great for you both.

      • Kenna says:

        You are an idiot. You don’t even know why he is behind on the child support. Suppose it was some stupid woman that hid the child from him until he was 7 years old and now he has to pay back child support??? Who says she is trying to “skirt” the issue? You sound like a bitter child of divorced parents. Guess what–it was probably because of you that they got divorced.

        Alicia–not sure about your state but some states allow you to file a form that will protect your portion of your tax return.

        • Anonymous says:

          You cant owe back child support on a child you were not told about. Child support will not start being owed until the day the judge orders it (usually after a lot of paperwork and court dates) youhave no idea what you’re talking about.

          • mad dad says:

            I didn’t find out about my daughter until she was 11, and I owe for all the back support. I even went to court and proved I didn’t know, but after the perternity test proved I was the father, I still had to pay.

          • Jeannine says:

            I was in the same situation. And there are laws in states that protect your half of the return. you just have to file a form with your taxes and how much of the return is yours and you get your return. And the back child support gets paid form his share. And the child support starts teh day the child is born no matter what. If you findout 15 years later the bad part is you pay based on your salary now and not what it was 15 years ago. Which lets face it we all hopefully make more now then 15 years ago. The laws for child support are all for the mother and none for the father. and when you marry the situation your income can even be counted toward child support. Trust me it happened to me. I had to pay $250 a month for a child that was not mine and i could not even be in my own house when she was there for her weekend visit!! How is that fair!?!?

          • Brandon says:

            You can actually be liable for 17 years of child support even though you were had no knowledge of the child prior to the support being filed.

        • Anonymous says:

          It’s called an injured spouce form.

        • sassy says:

          You Know Who..yes you are an idiot, Kenna, so very well put. My husband established paternity in 2010. The woman left Detroit and moved to California, he had no contact etc. The lady has been on welfare the whole entire time. The kid is now 7 years old. Guess what, my husband owes 7 years of welfare money for a kid he didnt know was his until Sept of 2010..oh and he’s been at the same military installation since the woman got pregnant, but I’m sure she didn’t tell welfare that! Sure she played the “i don’t know who my baby daddy” role until it was time for her to start working for her welfare check. And yes, my portion of the taxes were intercepted. He was deployed all year, didn’t pay taxes and my refund was witheld. I filed an injrues spouse claim and it is currently processing. And by the way…in court he established paternity, but still doesn’t know where the kid lives, or have any visitation rights because as the judge stated “this is to establish payment, not visitation”. So now my husband pays 600 a month in support for a kid that might be living in the middle of Compton and he has to file a petition for rights. Guess what the military doesn’t give you a day off of work to do so…so all u smart asses shut up! By the way, i too have 4 children I don’t get support for, but you dont see me on welfare or complaining about it.

      • roxy says:

        I agree – you are an idiot. First of all – she’s trying to protect HER finances and her FAMILY. Why should she be penalized for her mistakes. How do you know he’s not trying to correct them. I would do the same thing. I wouldn’t pay some other woman’s child support when I have my own kids to take care of. I suspect neither would you.

        You sound like a scorned ol’ lady.

        • heaven says:

          I agreee roxy! It is not her responsibily to pay 4 his child support. I’ts his! So to the poster protect ur money!

    • Darla says:

      You can still file married filing joint and you could qualify as an “Injured Spouse.” See if you qualify.,,id=141236,00.html

      Note: If you file as Injured spouse, you will have to mail your return since you will not be able to efile.

      Hope this helps

    • Melissa says:

      You could also file an injured spouse form that’s what I do and I get my portion of the return back.

  4. Kim says:

    I’m trying to figure out what to file. I just got married in October. However I have been working all year and he just started a job a few months ago after not working all year. I have three dependants. I do have a student loan that has accrued interest but thats all. Should I file MFS or MFJ?

    • keiffer says:

      married filed jointly is the best thing for you because you will have a greater deduction. also if you filed seperatly you will not be qualified for any educational benefit and child tax credit.
      if you take a standard deduction it will be cut in half of what it would be if you filed married filed jointly.

  5. Becky says:

    I am a little confused by how to determine when to file married/separately. My husband started college last year and his income was only $25,000 because he worked part time. Mine was about $97,000. What is the best way for us to file?

  6. Abby says:

    I got married in September. I owe a lot in school loans (about $70,000) but I am participating in an income-based repayment plan with public service loan forgiveness after 10 years. My payments increased when I went into income-based repayment but it was the only way to get the loan forgiveness, which was a much better deal paying them off after 10 years as opposed to 30!

    Right after my wedding I received a notice asking if my family size had increased. I checked yes – +1 husband – and sent it off. Next thing I know my payments dropped from $450/month to $250/month! I called and asked if I needed to give my husband’s income information. They said ONLY IF we are married – filing – jointly. I asked for an estimate for what my monthly loan payment would be if we filed jointly and gave his income (which is about 60% of my income) and they said my payments would increase to $650!!! We have decided to file seperately because I cannot imagine an income tax scenario that would be more beneficial than an extra $400 in my pocket each month – $4,800 a year. Especially with our meager incomes! 🙂

    I have no idea what to expect on taxes this year because it is our first year owning a home and itemizing.

  7. zq says:

    I am currently a student about to take a leave of absense for a year. I also got married recently. I want to know if I should file seperately since my income is currently 0 and in that case I might qualify for an adjusted repayment on my student loans(160k) that are about to enter repayment as soon as i take my leave from school. If i file jointly with her im afraid that the banks will ask for the entire monthly amount which is too much to repay at this stage of my career.

    • enrolled agent says:

      hi, you can still file M.F.J. if they take the loans that you owe to collection then there can be a garnish from your return , however if such the case your spouse can file a protection claim to protect her return on her taxes. scince you dont have an income for the tax year your wife would benefit from a M.F.J filing status. good luck

  8. kelly says:

    my husband and I have 7 dependent he makes over 90k and I only make about 3,000 year I’m in school. he also pays child support for a another child. we to houses and we were told by our tax person its best for us to file joint. but someone told me that if we file seperately i won’t lose my financial aid. whats the best choice for us.

  9. Anonymous says:

    I make 140k last year and my wife makes 25k a year last year. I file joint married and it put me in high tax rank, which I lost a lot of money doing so. I lost 5k in taxes coming back, would it be better if I fill separately I paid 46k last year in taxes and some. So about half of my pay checks go to the government and state taxes. Also my company pays Algeria, taxes so that gives me a little back extra. I work 28 and 28 out of the USA. But I don’t get any taxes breaks like people think you do.
    If you have any good suggestion I’m listening

  10. Annette says:

    Last few years my husband and I filed jointly. We ended up having to pay taxes. So I figured our taxes this year jointly and we would have to pay again. So I figured them filing separate. Found if I did them that way we both would get a huge amount of money back. So is it ok for me to file separate?

  11. nikki says:

    because my husband owes back child support that is not my responsibility!

    • Anonymous says:

      ohhhh but it is.

      • Danielle says:

        Anonymous, it isn’t up to you to arbitrarily decide that one spouse is responsible for another’s debt. Each of these situations needs to be considered separately, and there are a multitude of factors that determine when and if a new spouse is responsible for old debts, especially child support. Who do you think you are to go around making such ignorant, unkind comments?

      • Anonymous says:

        Oh, but it is not That is a mistake he made prior to meeting and marrying her. His child is NOT her responsibility

    • enrolled agent says:

      thats true, you can still file married file jointly file to get the benefit,however you must file a protective claim on your retuns.

    • Tabitha says:

      I am not sure, but you can look into filing for injured spouse, which from what I understand, if filing a joint return, will not allow them to take his portion of the taxes. Look into it, at least… It could not hurt.

  12. newlywed2010 says:

    I’m a newlywed and I know what is best for me and that is to file married filing separately! He owes a TON of back taxes for 2 years he has had with his exwife – to the tune of $35K+. My husband also was claiming 8 on his W2 while I have been consistently claiming 2 even when I was single. I have a son who I claim every year and I know I don’t qualify for EIC or Dependent Care Expenses, I think I’m making the right decision…. Right???

  13. cardind3x says:

    My wife and I usually file jointly and get a decent refund. This year, I have finished grad school with $150k in loans and am not yet employed, but hoping to consolidate under the Fed and and qualify for IBR. My wife is employed, earns $65k and is also in grad school part time. She has a few loans but nothing like mine. Am I right in thinking that we should be filing separately so that I qualify for IBR and that she gets a decent refund?

    Thanks so much for your help.

    • JRA31 says:

      cardind3x: This is exactly my situation, and I thought it wouldn’t be that big of a deal, but, after running the numbers, we’d get 2k back filing joint, but he’d have to pay $5,800 filing separately! (I’d get $600 back tho!) Filing separately means no child tax credit, nothing childcare expenses, and nothing for the $$ I spent on school this year. Although I think we’d ultimately come out ahead under IBR (I calculate bringing our payments from 1k to 200 a month using my income alone), I’m frustrated at the thought of coming up with 5k right now…especially as I graduated in May and just started working in December!

  14. Anonymous says:


    • Mike says:

      Would highly suggest given your incomes that you try filing jointly and see how much you’d get vs. filing separately.

    • sassy says:

      Hey Anonymous, I was on unemployment for a few month, and there is an option of allowing them to take taxes from your unemployment check I dont remember if it was state/fed or both..I did that, and it saved me a whole lotta headache, and..I got a good refund back even though i was on unemployment. Look into it really good. You won’t have to worry about owing..because you have the 2 dependants joint would probably be best. Your income wasnt a whole lot and you will still qualify for eic and childcare credits. If you file seperate, you will lose those credits.

  15. Tabitha says:

    I owe student loans which are garnished from my paycheck each week, so I know they are taking my return. I just got married in Sept. and do not want my husband held responsible. I was told that if we file separately, they can not touch his money, but we will not be eligible for other credits, which is ridiculous, because that would still be punishing my husband for my previous debts. I heard that filing Injured Spouse on a joint return is the best option… Because from what I understand, they will only take my portion of the taxes…Any other suggestions?

  16. RAA says:


    I was throughtout in USA for 2010; I got married in Dec 2010 and my came here in USA first time in Jan 2011; in this situation since I am married in 2010 as per law and she was non-resident for 2010, can I file my tax return with status as Married filling Jointly? She does not have any income. Thanks!

  17. LMSH says:

    I need help please! Should we do MFJointly, or MF Separately? I bought a house in the first week of April 2010 (and amended my 09 returns to include that a few weeks later). I just got married in October 2010. Only my name is on the house still. I make $30,000 a year working FT, and I go to school half-time (I receive tuition assistance and financial aid, so I have some student loans). My husband is a disabled veteran, and was on unemployment for a few months in 2010 (which he didnt pay taxes on then.) He’s a FT student (receives GI Bill, so no loans), and had 2 part-time jobs for half of 2010. I’m guessing he made ~ $15,000. He also owes the IRS ~ $600 from the army messing up his returns from 08/09. How should we file???? I have NO idea how to do it, and I’m really hesitant to trust (& pay) H & R Block to do it. Please help!

  18. RLL says:

    I felt compelled to reply to this Anonymous person concerning the child support issue. I know from personal experience that child support does not start when the child is indeed confirmed to be the fathers. My husband was not told he was the father of his daugther for 11 years, yet the state is making him pay back child support and interest because the mother was on federal aid. It is not fair by no means, but this is what happens to good fathers!!! So by all means Anonymous, know what you are talking about before you start judging others!!!

  19. Michelle says:

    my husband and i got married in Nov 2007 and filed MFS in 2008. I make more than him, in 2008 he made about 65k and i made about 75k. His tax return then was about $3000. He has two sons, they live with us fulltime, haven’t seen or heard from their mom in 10 years. He claims them which is fine. I have a daughter and claim her. I have a condo in florida which is rented. My father also passed away in 2006 and left me his house. Last year, I decided that I needed to claim the expenses and income from both rental properites, as I had never done that before. We again filed MFS, he claiming the boys and the house we live in and myself claiming my daughter and the two properties in florida etc. We don’t even keep our money together still, so it made sense to file seperate. However, last year his return was only about $1500. He also made more money. This year, I’ve been sitting here running through our taxes online and again am doing MFS but it looks like I’m getting back about $6000 and he is only getting back $200. He is mad. I am confused. He made $80000 and I made $115000 this past year. Any ideas? He feels cheated but honestly I think I should get this much back, I’ve had alot of things to payout this past year on the two properties down there (NEW A/C etc) and I feel like I should get this money back. I also feel though, that he should be getting more than $200 back. He pays the mortgage for the house we live in and pays childcare for our 10 year old. I pay for both properties in florida, the entire families medical/dental/vision insurance, I have 9% going into a 401k, etc etc,,,, HELP!!!!

    • Mike says:

      A few comments :
      1. him making 80 and you 115 puts the 2 of you at 195 total. Take a look a your w2s and add up the taxes/ss, etc. divide by the total and you should be paying about 28%. If you’re paying more, then you both will get money back. If its less, you’ll have to pay unless your deductions offset it.

      2. I assume you’re doing the mortage interest deductions, the 3 boys (since he’s paying for the childcare), etc.

      3. Keeping money separate and paying according to what you guys have decided has nothing to do with taxes – its just how you’re splitting the burden.

      4. Your two property incomes should add to your total income and works against you because of the higher income. The offset comes with the maintenance of the 2 properties, mortgage interest, taxes, insurance, etc.

      5. Paying 9% into 401K just takes it out of your taxable income and therefore, your total income reduces (say for example from 100K to 91K).

      At the end of the day, if both of you are doing everything correctly and that’s whats coming back to you, then your situations are assessed correctly.

      As for the splitting of the burden of your current bills and expecting a return for them, you just have to add up who is paying how much out of pocket and see what percentage is coming from whom and split the total refund according – just a suggestion. Otherwise, it is what you would be getting back based on your finances and he can be pissed, but that’s what the law says – just because he was getting $3000 every year, it doesn’t mean he will be getting it every year until he retires..

      Please take my opinion as only that. Ultimately you two will have to decide what to do.

  20. JL says:

    Hi! I am single making 70K a year. I am getting married this year. My fiance is single making 45K a year. I own a house that I claim. He owes $1K in back taxes, and is currently collecting unemployment without taxes being withheld (even though I am trying to make him switch it so his taxes are taken out) I have a feeling if we file next Feb 2012 as married/joint, my taxes that I usually get back will be garnished because of what he owes. I think it will be a wash and we wont take in any money back, or owe any. Any suggestions? I kind of want to keep my money (lol) but I guess thats part of what comes along with marriage!

    • Mike says:

      Suggestions :

      try using an online tool to figure out how much you’d get back, he would get back, both of you using this :

      Since you own and he OWES AND I assume you have no children, Married filing separate makes sense – because you wouldn’t really be affected by loss of education & child tax credits.

      Alternatively, if you both file together and you have enough expenses from the house you own, it can lower your total taxable income.

      So here’s a few scenarios that I ran.
      MFS (for him) with $20,000 unemployment (assuming $400/wk) – he owes $1150 @ 15% tax rate. The assumption here also is that he’s had taxes withheld from his checks while earning 45K. Same scenario – $45K earnings + $20K unemployment with 25% withheld (~$11K), he gets a refund of $1250.

      MFS (for you)
      75K earned – 10K (itemized deductions for your home – which lowers your taxable income), 18750 paid in withholdings (assumption), you’d get a check for $7300.

      Combined, your $75K + his $45K + $20K unemploy. – 25% (of your 75+his 45) = $30K. This doesn’t include the $20K unempl.
      Less $10K itemized deductions, you’d get $7500. Split it 66/34 and you get $5k and he gets the rest.

      Again, you know the numbers and you’d have to add up your taxes from w2 and plug into the form to get the estimate.

      The only way to find out is to do it.

  21. Tash says:

    My husband and I were thinking of filing separately this year. He makes $40,000 more than I do, but the main reason we are thinking of filing this way is he owes a lot of student loan, they take it out of his paycheck every month but whenever he file his taxes that is also taken and apply to the loans. I do not want my refund to go towards his loan.

    Do you think this is the best way to deal with this situation.

  22. SteelyJen says:

    I got married in May, sold my house (did not make a profit) and paid $1K in closing costs. Until 12/31/10 I had a Tastefully Simple business (direct sales-parties in people’s homes). I thought that filing married but separately would be better because of having my house taxes/sale in my name only, plus the direct sales business.
    From what I am reading, it sounds like that might not be the best option. Am I correct in my assumption? Any suggestions?

    • Mike says:

      Too many unknowns to suggest which way to file.
      Does your husband have a house? Mortgage?
      Do you work fulltime besides your Tasteful business?
      Are you incorporated to do the business? or is it “self-employed”?
      Didnot make profit – does that mean you had a loss? or broke even? putting aside the $1000 closing cost.
      Do you have kids? he have kids? etc.

      Options :
      1. Speak with an accountant
      2. Use turbotaxonline – they don’t charge you until you’re ready to file, so might as well try both joint and separate to see the benefits
      3. quick and dirty estimation : use the dinkytown link above to put in rough numbers to see how it would look.

      2 & 3 assumes you have time to read boring IRS materials/instructions and know the basics.

      • SteelyJen says:

        No kids for either of us. He does have a house (has had for 12 yrs) and I am not on the mortgage. As for my business, it’s not incorporated. It’s just a home-sale/direct-sale thing…I make 30% off what I sell and have to pay taxes on what I sell to other people.
        I do work full-time.
        As far as the sale of my house is concerned, I hate to say it, but how to do I know if I took a loss? I had to put $3K towards a new roof (it went in escrow) plus the $1K closing costs. I bought at 103,5, but after what I put into it, and essentially giving the new owner a new roof, I don’t know how to tell it’s a loss.
        My husband made a comment that with my home sale, he thought married-separate might be better for me, since I sold the house and I make less than he does.

        And, the IRS website is REALLY boring…and not situational at all.
        Thanks for your help!

        • Mike says:

          Jim Wang & William Perez’s link above in the article both indicate that it is better for most people to file jointly.

          Now, if you and your husband have kept your finances separated, then it might make sense to file separate (though in this situation, since he makes more, he would benefit from your loss on the sale – will explain below).

          Getting back to whether it was a loss or not :

          You bought it for $103.5K + $3K on the roof = $106.5K is the adjusted price on the house.
          Lets say you sold the house for $110K – you made $3,500. Lets say you sold it for $100K – you lost $6,500.

          As for deductions, the cost of the roof is deductible, mortgage interest etc. The closing costs however are not. The loss from the sale of the house is deductible $3K max/year and rolled over – meaning if you lost $15K on the sale of the house, then you can deduct $3k every year for 5 years.

          Here’s a few reading links:

          The explanation from above that I mentioned – Example : 1st Husband filing separate, 2nd Wife filing separate, 3rd filing joint
          1. Husband earns $100K, Mortgage interest $20K, Paid taxes on w-2 $30K (30%)
          Therefore his net Adjusted Income $50K and he would get a refund of about ~$14.5K

          2. Wife income (from fulltime job) $40K, $10K from business, Loss on sale of house $3K (as its maximum per year), $2K business expenses, $3K roof cost, $5K mortgage interest, $10K (30% held on w-2)
          Net = 40+10-3-2-3-5-10=$27K. In this example, since no tax was paid on $10K business, wife gets refund of ~$5K
          3. Combined with the numbers above – refund ~$21K.

          Fair split would be ratio of salary 100K of his to $50K – or take what you were both going to get and split the difference because of the other person’s benefit.

          Please don’t get greedy and say, it was my losses that lowered your liability and therefore you’re getting more because of me.

          If you don’t care to run these 3 scenarios with your actuals, then I highly suggest talking to accountant and let him figure out what’s the best for your situation with your actuals.

  23. Jen says:

    I have a defaulted student loan and my husband and I have to file an injured spouse form every year. Last year they took $400.00 of our return even after the injured spouse form because that was the credit received for me. Should we continue to file married joint or should we file married separate?

    • Mike says:

      No sure I understand correctly. Let me try to summarize :
      You have a defaulted loan.
      Your spouse files the injured form so that you don’t lose your “refund”
      So last year they took $400 because that was your credit received but he owed money to IRS?
      Doesn’t make sense..

      The injured spouse form is to help protect one spouse who isn’t liable when the other one owes. I assume since he didn’t owe, he wouldn’t have lost the $400 credit that you got.

      Either way, there’s not enough info to figure it out here. I suggest you file injured spouse form and then file separate to get some refund.

      At the end of the day, the IRS will come after whatever you owe to the government.

  24. Olivia says:

    My husband made $80,000.00 last year. My daughter is 18 and worked part time for the past 6 months making $238.00. Should we claim her on our taxes this year or should she file her own taxes? Which will help her to get more financial aid for college?

    • Mike says:

      Clarification needed : $238/day? /week? or /month? Since she’s only 18, I will assume /week. Then her 6month total should be ~$6000. First, fill out this questionnaire from FAFSA’s site to determine if she’s considered to be a dependent or not.

      At the end of the questionnaire, it will tell u whether her parental information + taxes are required or not.

      If it isn’t required, ofcourse she would have a much better financial aid package given her low salary.

      Otherwise, if she’s required to file parental info, then:
      1. She would have to file her taxes saying that she’s your dependent and she either get some of her taxes or have to pay (I can’t venture a guess because of lack of info).
      2. Your husband would have to file his taxes and claim her and then she would need to use that AGI (Adjusted Gross Income) filling in the FAFSA application to determine how much aid she would be eligible for.

      Hope this helps.

  25. Jen says:

    I have an outstanding defaulted student loan. We usually file married joint but we have to file an injured spouse form. Last year the IRS kept $400.00 of our return even after the injured spouse form was filed. This was my portion of the tax credit. Should we file married separate or married joint?

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