The tax code is set up to offer a number of tax breaks to married couples who file joint returns, so usually filing jointly with your spouse saves you money. However, in certain circumstances, you may actually pay more money when you file a joint income tax return than you would if you filed separate returns -- or even if you weren't married and you and your spouse filed single returns.
Very High Incomes
The federal income tax brackets for both single filers and joint filers both share the same starting amount for the highest income-tax bracket. As result, if you and your spouse earn enough to fall in that highest bracket, you could end up paying more than if you were both single. This typically only affects couples where both spouses have high earnings that reach the top tax bracket. Couples where only one spouse works and brings an even larger paycheck usually pay less.
Example of Marriage Penalty
For example, let's say that the highest tax bracket is 35 percent and starts at $400,000 and that the tax liability for your first $400,000 of income is $100,000 for singles and $80,000 for joint filers. If you and your spouse both make $400,000 and you were single, each of you would owe $100,000, for a total tax liability of $200,000. However, when you file jointly, the second $400,000 is taxed at 35 percent, so on a joint return, you'll owe the $80,000 on the first $400,000 and $140,000 on the second $400,000, for a total tax liability of $220,000.
Loss of Certain Deductions
When you file a joint return, you may miss out on certain deductions that are reduced by a percentage of your adjusted gross income, such as the medical-expenses deduction or unreimbursed employee expenses. For example, you can only deduct the amount of unreimbursed employee expenses that exceed 2 percent of your adjusted gross income. If only one spouse has such expenses, but you file a joint return, both spouses' incomes are included when figuring the AGI threshold.
Filing separate returns when you are married might qualify one spouse for a larger deduction, but that doesn't mean that your overall tax bill will be lower. When you file separate returns, you aren't eligible to claim a number of tax deductions. including the student loan interest deduction, the child and dependent care tax credit, and credits and deductions for college costs. The loss of these credits may more than offset any gains from one spouse who's claiming a larger medical or unreimbursed-employee-expense deduction.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."