You’re single if you’re unmarried or legally separated from your spouse on the last day of the year
This one’s pretty straightforward. And, depending on your circumstances, it may be your only option. Your filing status is determined as of the last day of the tax year (December 31). To use the single status, you must be unmarried or separated from your spouse by either divorce or a written separate maintenance decree on the last day of the year.
Married filing jointly may result in tax savings for married couples
You may file jointly if, on the last day of the tax year, you are:
• Married and living together
• Married and living apart, but not legally separated under a divorce decree or separate maintenance agreement, or
• Separated under an interlocutory (i.e., not final) decree of divorce
Also, you are considered married for the entire tax year for filing status purposes if your spouse died during the tax year.
When filing jointly, you and your spouse combine your income, deductions, and credits. Filing jointly generally offers the most tax
savings for married couples. For one thing, there are many credits that you can take if you file a joint return that you can’t take if you file married filing separately. These include the child and dependent care credit, the adoption expense credit, the American Opportunity credit (the Hope credit), and the Lifetime Learning credit.
Still, this filing status is not always the most advantageous. If your spouse owes certain debts (including defaulted student loans and unpaid child support), the IRS may divert any refund due on your joint tax return to the appropriate agency. To get your share of the refund, you’ll have to file an injured spouse claim. You can avoid the hassle by filing a separate return.
You don’t have to be separated to choose married filing separately
You and your spouse can choose to file separately if you’re married as of the last day of the tax year. Here, you’d report only your own income and claim only your own deductions and credits. Filing separately may be wise if you want to be responsible only for your own tax. With a joint return, by comparison, each spouse is jointly and individually liable for the full amount of the tax due. So, if your spouse skips town, you’d be left holding the tax bag unless you qualified as an innocent spouse.
Filing separately might also be the best tax move if one spouse has significant medical expenses. Your ability to take this deduction is tied in to the level of your adjusted gross income (AGI). For example, medical expenses are generally deductible only if they exceed 7.5 percent of your AGI (in 2019 and 2020). By filing separately, the AGI for each spouse is reduced. Keep in mind that if you and your spouse file separately and your spouse itemizes deductions, you’ll have to do the same.
Remember, though, that you won’t qualify for certain credits (such as the child and dependent care tax credit) and can’t take certain deductions if you file separately. For example, you cannot deduct qualified education loan interest if you’re married, unless you file a joint return.