Can a married couple living together file separately? One spouse is on AS I and didn't pay income tax on it.

[bluedeb · Accepted solution]

Yes, a married couple living together can file as Married Filing Joint or Married Filing Separate.  

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)
• The standard deduction if your spouse is claiming itemized deductions

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, 2018 are able to file as married, whether jointly or separately.

Filing jointly means you file one tax return. When filing separately, you file two tax returns. In the Online version to file as Married Filing Separate you need to create two separate accounts. In the Desktop software to file as Married Filing Separate you would start a new return to complete the other spouse's return.