Married Filing Separate -- Filing Status

Unfortunately the divorce rate in the United States is around 50%. Before those marriages end in divorce, couple separate. Often they don’t know what status to file and assume they should use: married filing separate (MFS). MFS is the WORST filing status and there are other options available.

First lets discuss why its the worst status to use. No one pays tax on every dollar they make. The I.R.S. gives us a personal exemption and a standard deduction that we can deduct from our income before finding the amount we pay taxes on. If someone (like a parent) can claim you on their return then you don’t get your exemption but you still get your standard deduction. After those two amounts there are deductions (reduces our taxable income) and credits (reduces our tax liability) that help increase our refund or decrease what we owe. There are credits such as the earned income credit that are disallowed when using MFS. Other than several credits not being allowed deductions are eliminated or reduced. A person who is head of household (HOH) or a couple that is married filing jointly (MFJ) can earn more income while qualifying for the educational credit. While someone who is MFS has a lower income limit for most deductions and credits. Additionally eighty-five percent of your social security income is taxed when using MFS.

Now I’ll give you alternatives to MFS. If you think you have to use this status because you’re married but not together its not true. If you and your spouse didn’t live together the last 6 months of the year you can choose to file Single or HOH. This is true even if you aren’t legally separated. And as long as you’re legally married you can still file MFJ. You don’t have to live together to file this way. And you can even have your redund split and deposited in up to three different accounts.

If you’re filing separately because one of the spouses has a debt (like child support or student loans) that would take their refund theres help for you to. The IRS allows married couples to file jointly and use a form called injured spouse (IS) for relief. In a nutshell the IS form allows taxpayers to have the advantages of MFJ while only the portion of the refund due to the spouse with the debt is garnished.

Now we do recommend MFS for spouses who don’t want to be liable for their spouses part of a current return. For example, your spouse operates a business and under reports the income on a MFJ return. If the IRS discovers this income then back taxes, penalties and interest would be owed by both of you. Which means the I.R.S. can go after either one of you.

If you file a MFS return you have three years from the filing due date to amend (change a previously filed return) that return and change to MFJ. If you file MFJ you have until the filing due date to amend that return and change to MFS.

Many people have created a status Married Filing Single. That isnt an official filing status.