Getting married means sharing not just a life, but possibly, your taxes. It generally makes sense for married couples to file tax returns jointly, because doing so offers the most favorable financial outcome. When you file a joint return, you share your tax liability, tax deductions, and, if applicable, your tax refund. You also get a higher standard deduction than you would by filing separately. That said, you don't have to file jointly once you're married, and in fact, there are certain scenarios where it makes sense to file separately after tying the knot.
Why file a joint return?
There are several advantages to filing a joint tax return. For one thing, joint filers get the highest standard deduction: $12,700 for the 2017 tax year. If you're married but file separately, you'll get the same standard deduction as a single filer: $6,350 for the 2017 tax year. (Note that the standard deduction is much higher in 2018: $24,000 for married couples filing jointly, and $12,000 for married folks filing separately.)
Furthermore, if you're planning to itemize on your taxes, filing jointly might enable you to maximize that benefit. If you're married but choose to file separately, you'll not only potentially limit your itemized deductions, but lose the opportunity to take the standard. That's because the IRS mandates that if one member of a married couple itemizes, the other must do so as well.
There are also several key tax breaks you might become ineligible for if you don't file a joint tax return. Take the Earned Income Tax Credit, which is an extremely valuable refundable credit for lower earners. You'll also lose out on two helpful education credits: the American Opportunity Tax Credit and the Lifetime Learning Credit. Furthermore, you won't get to claim the Child and Dependent Care Credit, which could hurt you if you're spending a lot of money on child care so you and your spouse can work or look for work.
You might also lose out on the student loan interest deduction if you don't file a joint return. Depending on your income, you may be eligible to write off up to $2,500 in student loan interest, but not if you're married filing separately. Furthermore, qualifying tax filers can write off up to $4,000 in tuition and fee expenses depending on income -- but again, married couples filing separately aren't eligible.
When it might pay to file separate returns when you're married
Usually, you'll come out ahead by filing a joint tax return if you're married. But there are certain scenarios where married filing separately can work in your favor. One such example is if you have a large number of medical expenses, but your combined income renders you ineligible for the associated deduction.
You're allowed to write off medical expenses that exceed 10% of your adjusted gross income (AGI). Now let's imagine you spent $10,000 on eligible deductions, but your combined AGI with your spouse is $100,000. This means you won't get to take a deduction at all. However, if your individual income is $40,000, and you file separately and take the deduction alone, you'll get a $6,000 write off. (Of course, in doing so, you might lose out on other tax breaks, so don't base your decision on a single deduction. Rather, look at the whole picture.)
Another reason to file a separate return when you're married? If you suspect your partner might be engaging in tax fraud. Though it's certainly not the most common scenario, when you file a joint return, you're equally responsible for the information it contains. If that information is erroneous, and the IRS presses charges, you could land in hot water, even if that false data didn't come from you. But if you file a separate return, your spouse's lies become his own individual problem.
If you're married and aren't sure whether to file a joint tax return, it pays to spend some time crunching numbers and seeing which scenario works out better for you financially. Most of the time, you'll come out ahead with a joint return, but you never know when you might end up being one of those rare exceptions.