The Consequences of Filing Married Separately

Posted by Lee Reams Sr., BSME, EA on

Filing Married Separate can lead to a myriad unexpected and in many cases unnoticed and unfavorable tax consequences. The article includes a condensed list of encountered consequences.   


This is a condensed list of commonly encountered issues when married taxpayers use married filing separate status as opposed to filing a joint tax return.

PO = phaseout    Dollar amounts are for 2023


Married Joint

Married Separate

Filing Threshold

Std Deduction + age 65 amts.



Changing Filing Status

MFJ to MFS allowed only if by the unextended due date.

MFS to MFJ OK within 3 years of the unextended due date.


Community Property

Only applies when filing MFS returns

Earned income split;

FICA, SE Tax, IRA separate


Joint & Several Liability

Both spouses are responsible for the tax

Only responsible for tax on separate return

SS Benefits

Taxation Threshold




(Entire amount taxed at 85%)

Capital Loss Limitation



Sec 179 Limitation


Allocate between spouses

Rental Loss Limitation

$25,000 – PO: 100K-150K

$12,500 – PO: 50K-75K


Traditional IRA

Both Active PO: $116K - $136K

One Active PO: $218K - $228K


PO: $0 - $10,00

Roth IRA

PO: $218K - $228K

PO: $0 - $10,000

Series EE or I Bonds – education exclusion




None Allowed

Higher Education Interest

$2,500 per year

None Allowed

Standard Deduction

$27,700 + Age 65 Amounts

$13,850 + Age 65/blind Amounts


Standard vs Itemized



If one itemizes both must, except if filing HH even if the other itemizes. 

Medicare Premiums

Rates for MFS are significantly higher based on MAGI


Home Mortgage Interest

MFS spouses are treated as if they are one taxpayer and will have to split between them the amount they would be entitled to jointly. If two homes each can only claim interest on one unless they agree one can claim both.



Use half of MFJ exemption and PO.

MFS threshold for 28% tax rate is half that of MFJ

Tax Rates

Marginal rates for MFS are twice that of MFJ

Child & Dependent Care Cr.

MFS cannot claim unless legally separated

Child & Other Dependent Cr.

PO Threshold: $400K

PO Threshold: $200K



Where one spouse can file as HH and lives in a community property state, EI for the credit does not include amounts earned by the other spouse


Adoption Cr.

Allowed for MFS only if spouses lived apart last 6 months, child lived with taxpayer more than half the year, taxpayer provided over half the cost of maintaining the home. 

Elderly & Disabled Cr.


Not Allowed

Retirement (Saver’s) Cr.

No credit if AGI over: $73.3K

No credit if AGI over: $36.5K

Tax Withholding

MFS taxpayers only claim their own unless community property


Estimated Tax Allocation

Jt. estimates divided any way they can agree. Can’t agree, in proportion to MFS return tax.


Take credit for own payments

Estimated Tax High Income Safe Harbor – Prior Year Tax

AGI > $150,000

110% of prior year tax

AGI > $75,000

110% of prior year tax



Premium Tax Credit



Can claim

Cannot claim.

Exceptions: victim of spousal abuse, abandonment and low-income minimum payback.

Automatic 2-month extension

Out of the country

Applies to both even if only one spouse out of the country

Applies only to spouse out of the country.