201 Married Filing Separately Lost Deductions & Credits

There are many reasons why taxpayers file a tax return using the married filing separately status. One spouse could have a previous tax liability where the IRS is seizing the tax refunds to pay down the tax liability. The tax refunds could be seized to pay back unpaid child support. They taxpayers could have decided to keep their tax liability separate.

Things to consider when using the married filing separate filing status.

1. Your tax rate normally higher than it would be on a joint return.

2. Your exemption amount for calculating the alternative minimum tax is half of that allowed on a married filing jointly tax return.

3. In most cases, you can’t take the credit for child and dependent care expenses. The income amount you can exclude from under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit.

4. You are unable to take the earned income credit.

5. You are unable to take the exclusion or credit for adoption expenses in most cases.

6. You are unable to take the credit for higher education expenses including the American opportunity and lifetime learning credits, the student loan interest deduction, or any of the tuition and fees deduction.

7. You are unable to exclude qualified savings bonds interest used for higher education expenses.

8. If you lived with your spouse at any time during the tax year:

You are unable to claim the credit for the elderly or the disabled, and

You have to included up to 85% of any social security or equivalent railroad retirement benefits you received as taxable income.

9. Some credits and deductions are reduced at income levels are half of what the deduction would be for a joint married filing jointly return including.

The child tax credit.

The retirement savings contributions credit.

The deduction for personal exemptions.

Itemized deductions.

10. Capital loss deduction is limited to $1,500 (instead of $3,000 on a joint return).

11. If your spouse itemizes deductions, you can’t claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

12. If either you or your spouse (or both of you) file a separate return, you can generally change the status to a married filing jointly filing status within 3 years from the due date (not including extensions) of the separate return or returns by filing an amended tax return using Form 1040x. This applies to a tax return either of you filed claiming married filing separately, single, or head of household filing status.

13 After the due date of filing a married filing jointly tax return, you and your spouse can’t file separate returns if you previously filed a joint return.

Exception. A personal representative for a decedent can change from a married filing jointly tax return elected by the surviving spouse to a separate return for the decedent. The personal representative has one year from the due date (including extensions) of the joint return to make the status change.

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