Should we file separately to deduct medical expenses?

andyhomer — Thu, 06 Jun 2019 08:51:23 GMT

My wife and I spent over $40k last year on IVF treatment. We are fortunate enough to make a combined income of $611k. We cannot deduct the expenses of IVF if we file jointly but if we file separately, the medical expenses would be above 10% of our income as an individual. We do not have any children yet (IVF worked and she's due in July) and make too much to deduct the interest on our student loans. Is there a tax benefit to file married but separately instead of jointly?

Generally, filing jointly will give you a bigger refund o...

ClarkeB — Thu, 06 Jun 2019 08:51:24 GMT

Generally, filing jointly will give you a bigger refund or less taxes due. When you file separately, your tax rate is higher and you won't be able to claim:

Education benefits
Earned Income Credit (EIC)
Child and Dependent Care Credit (usually)
Adoption Credit (usually)
The same benefit married filing jointly couples get for personal exemptions, itemized deductions, the Child Tax Credit, and capital losses (all of these deductions are reduced by half)
Itemized deductions if your spouse has already claimed the standard deduction, or the other way around.

On top of that, if you live in the community property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you have to deal with community property allocations and adjustments, which adds extra work and complexity to your tax preparation chores.

Tip: Only taxpayers who were still legally married as of December 31, 2015 are able to file as marrieds, whether jointly or separately.

Why would I want to file separately?

The main reason you'd want to file separately is to protect yourself from inaccurate tax information reported by your spouse, or in cases where your spouse refuses to file a joint return (or refuses to file, period) and you don't want to get in trouble.

Also, when you file separately, your refund cannot be seized to pay off your spouse's debts. However, filing jointly as an innocent or injured spouse can head off refund seizures as well.

With all that in mind, you can try it both ways to see which filing status works out better for the both of you. If you do this, also consider your state return; in some cases, the taxes saved on the state return more than makes up for the money lost on the federal, or vice-versa.

You can try the different ways with TurboTax's free calculator TaxCaster. It will give you the estimated tax differences when filing either way.

Related Information:

topic Should we file separately to deduct medical expenses? in Deductions & credits

Should we file separately to deduct medical expenses?

Generally, filing jointly will give you a bigger refund o...