Most married couples assume they should file joint income tax returns, and, usually, that’s the right choice. But under certain circumstances, filing separate returns may offer benefits.
Bear in mind that the differences between married filing jointly (MFJ) and married filing separately (MFS) can be complicated. Switching from one status to the other may increase some tax breaks while reducing others. So, it’s important to analyze the numbers before determining which status is best for you. With that in mind, here are some situations where it may be advantageous to file separately rather than jointly.
When one spouse has large medical expenses
Unreimbursed medical expenses are deductible as an itemized deduction to the extent they exceed 7.5% of adjusted gross income (AGI). If one spouse has significant unreimbursed medical costs and a relatively low income, filing separately may result in a substantially larger medical expense deduction.
Note that when filing separately, both spouses must itemize, or both must claim the standard deduction. Filing separately so one spouse can claim this deduction only works if the spouses’ combined deductions are greater than the standard deduction for joint filers.
When one spouse has business income
Eligible business owners in 2026 are entitled to deduct up to 20% of their qualified business income (QBI) from sole proprietorships or pass-through entities (partnerships, limited liability companies and S corporations). For specialized services businesses, which generally include businesses that involve investment-type services and most professional practices (other than engineering and architecture), the QBI deduction is phased out for owners whose taxable income exceeds certain thresholds.
Under prior law, the QBI deduction was set to expire after 2025. However, the OBBBA made the deduction permanent and enhanced the threshold amounts at which the deduction begins to reduce and phases out.
For 2026, the deduction is reduced for these business owners once income reaches $201,750 for single and MFS filers, or $403,500 for MFJ filers. It’s eliminated once income reaches $553,500 for joint filers, $276,775 MFS filers, or $276,750 for all other filers.
Here’s how filing separately can pay off. Let’s say Judy and Burt are married and their taxable income on a joint return is $600,000 for 2026. Judy’s sole source of income is $180,000 in QBI from a specified service business. If the couple files jointly, they lose the QBI deduction because their income exceeds the $553,500 threshold. But if they file separately, Judy will be entitled to the full 20% deduction because her income is below the $201,775 threshold for MFS filers.
When one spouse owes student loans
With income-driven payment plans, the borrower pays a certain percentage of income for a specified term, after which the remaining student loan balance may be forgiven. For married borrowers, some of these plans will base loan payments on only the borrower’s income, not the joint income of the borrower and his or her spouse, if the spouses file separate returns.
However, it’s important to be aware that MFS borrowers aren’t eligible for the student loan interest deduction, regardless of income.
Weigh the factors
Under the right circumstances, filing separate returns can generate significant tax savings for married couples. To determine whether this is the right strategy for you, consider the overall impact of MFS status on your combined tax liability.
Filing separately may save taxes in one area, but it may cost you in others. For example, separate filers can’t claim certain education credits, child and dependent care credits, or the adoption credit. Ask your tax advisor to calculate your tax liability for both joint and separate returns to see which approach produces the best outcome.
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