Notice 2014-7

[ndelossantos]

My wife and I both have W-2s that are subject to Notice 2014-7, can we file separately?

[Mike9241]

first note that MFS is generally the worst filing status for a married couple. there are rare exceptions. as to your question. A married couple can choose to file using the Married Filing Separately (MFS) status even if they are subject to IRS Notice 2014-7. Notice 2014-7 primarily addresses the tax treatment of certain Medicaid waiver payments, not a couple's federal filing status. 

there is no quick correct answer as to what filing status is best. to find the lowest tax you  may have to do 3 returns. 1 each MFS and a joint return. 

[AmeliesUncle]

Yes, you can file Separately or file Jointly.  Notice 2014-7 has no effect on filing status, and filing status has no effect on Notice 2014-7.

As Mike indicates, strictly from a overall tax viewpoint, Jointly usually has better overall results than Separately, but there are exceptions.