You can claim eic if you have the filing status ‘married filed separately

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When Does Married Filing Separately Make Sense?

By Bonnie Lee Published June 02, 2011 Taxpertise

You can claim eic if you have the filing status ‘married filed separately

If you are married, you have a choice of how to file your tax return. The obvious, and usually most beneficial, filing status is married filing joint. However, if you and your spouse lived apart the last six months of the year and you have a qualifying person who qualifies you for head of household status, you may select to file as head of household. Your tax bill will be considerably cheaper.

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Married filing separately is usually the most expensive filing method tax wise. But sometimes this method may prove to be a money and stress saver, especially if your spouse is something of an outlaw. By using this filing status, you can ensure that your tax issues do not comingle with those of your spouse and you avoid IRS collection problems, liens and levies by keeping your finances and taxes separate from those of your spouse. If you live in a community property state, youll likely need to do more to protect yourself than resorting to this filing status.

Married filing separate usually results in higher tax liabilities. Heres why:

1. In general, the tax rate for married filing separately is higher, rendering a higher total tax bite. I run the numbers both ways for my clients to determine if married filing separately would be advantageous and every once in a great while it shakes out that way, but not very often.

2. You do not enjoy the following tax credits: earned income credit, child and dependent care credit, education credits, exclusion or credit for adoption expenses. If you lived with your spouse at any time during the tax year, you cannot take the credit for the elderly or disabled.

3. If your spouse itemizes deductions you must also itemize deductions. Check it out: If your spouse owns the home in which you both reside, he or she may possibly deduct the mortgage interest, property taxes, all the big-ticket items, leaving you with considerably less than the standard deduction to reduce your taxable income. That could leave a mark!

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4. If you own rental real estate, you enjoy a special allowance of $25,000 a year in losses (special rules and income limits apply) if you use married filing joint status. But you dont get this special allowance if you are filing separately. Consider the tax bite this creates: You do not lose the losses completely; they can be carried forward to offset passive income in future years or go against a profit in the year of disposition of the rental asset.

5. Many of your allowances and deductions are slashed in half. The capital loss deduction is reduced from $3,000 to $1,500. The first time home-buyer credit is allowed at $4,000 rather than $8,000. Your exemption amount for figuring the alternative minimum tax is half what it would be on a joint return. And the child credit and retirement savings contribution credits are also cut in half--your spouse, of course, gets the other half, if he or she qualifies.

6. You dont get the deduction for student loan interest.

7. If you lived with your spouse at any time during the year, you will have to include a higher percentage of Social Security benefits or railroad retirement benefits in your income.

Because your adjusted gross income (AGI) will likely be lower under married filing separate, you may enjoy a larger deduction for expenses that are tied to the AGI like medical expenses, employee business expenses, etc.

If you wish, you can amend a return that was filed separately, going back three years. However, once you file a joint return, you cannot go back and amend it to file separately. There is one exception to this rule which applies to surviving spouses.

Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know, available at all major booksellers. Follow Bonnie Lee on Twitter at BLTaxpertise and at Facebook.

you can claim eic if you have the filing status ‘married filed separately

You can claim eic if you have the filing status ‘married filed separately

You can claim eic if you have the filing status ‘married filed separately

You can claim eic if you have the filing status ‘married filed separately

You can claim eic if you have the filing status ‘married filed separately

1. You are unmarried or considered unmarried on the last day of the year.

2. You paid more than half the cost of keeping up your home for the year.

3. A Qualifying Person lived with you in the home for more than half the year.

1. Cannot take the credit for child and dependent care expenses, the Earned Income Credit, or the education credits.

2. Cannot exclude any interest income from qualified U. S. savings bonds that you used to pay higher education expenses.

3. Must include up to 85% of your social security income if your spouse lived with you at any time during the year.

4. Cannot roll over amounts from a traditional IRA to a Roth IRA if your spouse lived with you at any time during the year.

5. Will be subject to reduced deductions and credits for capital losses, the child tax credit, retirement savings contribution credit.

1. You do not file a joint return

2. You paid more than half the cost of keeping up a home

3. Your spouse did not live in your home at any time during the last six months of the year.

4. Your home was the main home for your child, stepchild, or eligible foster child for more than half the year.

5. You can claim an exemption for the child.

you can claim eic if you have the filing status ‘married filed separately

Single - You were unmarried or legally separated from your spouse under a divorce or separate maintenance decree on December 31st.

Married Filing Jointly - You were married on December 31st and both you and your spouse agree to file a joint return. On a joint tax return, both spouses are reporting all their income, deductions and credits on one tax return.

Married Filing Separately - You were married or legally separated on December 31st and you and your spouse wish to file separate tax returns. When filing separately:

  • Each spouse is responsible for claiming their own income, exemptions, credits, and deductions.
  • Each spouse must file using the same method of deductions. For example, if your spouse files a Schedule A for itemizing their deductions, you too will have to file using the Schedule A, even if your standard deduction would be more beneficial to you.
  • Filing separately disqualifies you from various credits and deductions such as education credits, student loan interest deductions, child care credit and earned income credit.

Head of Household - You were unmarried or "considered unmarried" on December 31st as well as having to have paid for more than half the cost of keeping up a home for the year. In addition, if unmarried, you must having a qualifying person living with you in the home for more than half the year whom you can claim as an exemption. Married filers who are "considered unmarried" need to claim their child as a dependent to qualify for the status.

Qualifying Widow(er) - If you have a dependent and your spouse has died, you may be eligible to file as a qualifying widow(er) for 2 years following the year your spouse died. In order to use this filing status, all of the following must be true.

  • The year in which your spouse died, you were eligible to file as Married Filing Jointly.
  • Your spouse died in 2014 or 2015 and you have not remarried before the end of 2015.
  • You have a child or stepchild (except for a foster child) whom you can claim as an exemption and lived with you all year.
  • You paid more than half the cost of keeping up your home for the year.

Can I File Taxes Separately From My Husband?

The IRS allows you to choose the "married filing separately" status if you are legally married at the end of the year. This means that you and your spouse both file individual tax returns based only on your own income and expenses. For shared deductible expenses, such as the mortgage interest, you can only claim the amount that you paid on your own. If your spouse itemizes deductions, you must also itemize, even if the standard deduction would be more advantageous.

Head of Household and Married Filing Separately

In some cases, you can file as head of household while still married, if your spouse files a separate return. To qualify for head of household status, you and your spouse must have lived apart for the last six months or more of the year, not including temporary absences. You must pay more than half of the household expenses, your home must be your child's main home and you must be able to claim your child as a dependent. If you qualify for head of household status, you can take the standard deduction even if your spouse itemizes.

Advantages to Filing Separately

For some couples, filing separately can provide a lower net income tax burden. A couple filing jointly might be in a situation where deductions or exemptions are limited by the adjusted gross income, while filing separately would limit only one or neither of them. Deductions that must exceed a certain percentage of income, such as medical or miscellaneous itemized deductions, might be too small to be deducted on a joint return but large enough for a deduction on a separate return.

Disadvantages to Filing Separately

Choosing married filing separately on your return forfeits many credits that are available to married taxpayers filing jointly. Separate filers cannot take the earned income credit, the child and dependent care credit, the adoption credit, or any education credits or deductions. Other credits and deductions are reduced at half the income level of a joint return, such as the child tax credit, the retirement savings credit, the personal exemption and itemized deductions.

If you file your return as married filing separately, and then decide you would rather file a joint return, the IRS allows you to change your filing status. Use Form 1040X to file an amended return with joint status. You must file within three years of the due date, not including extensions, of the original return. If you file a joint return, you cannot amend it to married filing separately status after the tax return due date.

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