Someone asked me a tax question recently about how married couples can determine if they’re better off filing jointly or separately. I’ve yet to encounter a couple that’s benefited from filing separately. To that point, the IRS provides a host of reasons (you can see them here) that filing separately as a married couple can work against you.
The short of it is you lose eligibility to take quite a few tax benefits when you make the decision to file separately. Still, the “best practice” is for you (or your fancy tax software) to calculate which filing status provides the lower tax liability.
So when would a couple actually file separately?
It is possible that filling separately could result in lower tax liability as explained here, but I suspect that this status is more commonly used under a couple of scenarios:
- Couples that don’t want to share financial information for whatever reason (hollywood types, perhaps?) may choose to file separately as their privacy may be worth whatever the difference is in tax that Uncle Sam will collect
- Couples trying to protect one of the parties from sharing joint liability of the taxes owed as a result of one of the parties’ income/actions*
As always, if you have any doubts about what makes the most sense, you should consult a professional (CPA, tax attorney, etc).