Married Filing Separately (MFS)
Married Filing Separately (MFS) is a filing status for married taxpayers who choose to file individual returns. MFS results in the loss of many tax benefits including EITC, education credits, and adoption credit. If one spouse itemizes, both must itemize. Community property states require income splitting.
Exam Tip
MFS loses EITC, education credits, adoption credit. If one itemizes, BOTH must. Capital loss limit = $1,500. Community property states split income 50/50. Roth phase-out starts at $0.
What is Married Filing Separately?
MFS allows married couples to file separate returns. While rarely advantageous, it may benefit specific situations like protecting one spouse from the other's tax liability.
Credits/Deductions Lost with MFS
| Lost Benefit | Details |
|---|---|
| EITC | Completely disallowed |
| Education credits | AOTC and LLC disallowed |
| Student loan interest deduction | Disallowed |
| Adoption credit | Disallowed |
| Child/dependent care credit | Generally disallowed |
| Standard deduction | Reduced (half of MFJ) |
When MFS May Be Beneficial
| Situation | Reason |
|---|---|
| High medical expenses | Lower AGI = lower 7.5% floor |
| Separate liability | Protect from spouse's tax issues |
| Income-driven loan repayment | Lower AGI for IBR/PAYE calculations |
| Community property states | Must split community income 50/50 |
Key MFS Rules
| Rule | Details |
|---|---|
| Itemizing | If one itemizes, both MUST itemize |
| Capital loss limit | $1,500 (half of $3,000) |
| Social Security | 85% taxable at $0 threshold |
| Roth IRA MAGI | Phase-out $0-$10,000 |
Exam Alert
MFS loses EITC, education credits, student loan interest deduction. If one itemizes, BOTH must itemize. Community property states require 50/50 income split. Capital loss limit halved to $1,500. Roth IRA phase-out starts at $0 MAGI.
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Related Terms
Head of Household Filing Status
Head of Household is a tax filing status for unmarried taxpayers who pay more than half the cost of maintaining a home for a qualifying dependent, providing a higher standard deduction and wider tax brackets than single filers.
Filing Status
Filing status is a classification that determines a taxpayer's tax rate schedule, standard deduction amount, and eligibility for certain credits and deductions, with five options: Single, MFJ, MFS, HOH, and QSS.
Innocent Spouse Relief
Innocent spouse relief provides relief from joint and several tax liability when a spouse or ex-spouse improperly reported items on a joint return. Three types exist: innocent spouse relief (Section 6015(b)), separation of liability (Section 6015(c)), and equitable relief (Section 6015(f)).
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