If you're married, you are entitled to take certain deductions on your tax return. You may choose whether to file separately or combine your finances on one joint return. Because of differences in the tax brackets, separate filing may be better if both you and your spouse have similar incomes and deductions. However, some tax credits are available only if you file jointly. Whichever option you choose, the name on your tax return must be the same name on file with Social Security if you have recently married and changed your name. A mismatch between names and Social Security numbers can delay processing of your return and hold up your refund.
The standard deduction for married taxpayers filing separately is the same as the deduction for single individuals. If you file a joint return, you may take double this amount as a standard deduction. Married couples may be less likely than single taxpayers to use the standard deduction option because they can combine their itemized deductions to exceed the standard amount.
You can deduct unreimbursed medical expenses that exceed 7.5 percent of you and your spouse's total adjusted gross income, AGI. This threshold may be more difficult to meet when you combine your incomes on a joint return. If one spouse has significant medical expenses for the year, filing separately may be beneficial if your other deductions are not affected. You may also deduct medical expenses you paid during the year on behalf of your spouse. If you're a member of your spouse's health insurance plan, your benefits are exempt from tax.
The capital gains tax exemption for selling a residence is doubled if you file as a married couple. For 2012, the exemption is $250,000 per person if filing separately and $500,000 if you are eligible to combine your exemptions. To qualify for the higher exemption, both spouses must live in the home for at least two of the five years prior to the sale date. At least one spouse must also own the home for two out of those five years.
Child and Dependent Care Credit
The IRS offers a tax credit for child and dependent care expenses incurred so that you or your spouse may work. You aren't eligible for this credit if you file separately. The credit is available only for the care of a child under 13 or a physically or mentally disabled adult dependent. It is limited to 35 percent of your expenses and phases out as your AGI increases. For the 2012 tax year, the credit is capped at $6,000 per married couple. You may not claim a credit if the care was provided by a spouse, parent of the dependent, one of your children under age 19 or any person you can claim as a dependent on your tax return.
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