Filing Status Part III – Married Filing Separately (MFS)

Married couples may choose to file married filing separately (MFS). If so then special rules apply. If one spouse itemizes the other must also. Interest paid may not be deducted on a student loan. In most cases the taxpayer cannot take child and dependent care credit for expenses incurred, likewise the earned income credit cannot be taken. If Series EE U.S. Savings Bonds were used for higher education expenses the taxpayer may not exclude and of the interest income.

The taxpayer may not take credit for the elderly or disabled and may have to include more Social Security benefits received and cannot roll over any amounts from a traditional IRA or a Roth IRA if the taxpayer lived with a spouse at any time during the tax year.

The IRS code further stipulates a taxpayer may not take education credits, credit for adoption expenses and may have a smaller child tax credit than if the taxpayer filed jointly. Furthermore any capital loss deduction is limited to $1,500 instead of $3,000 if filing a joint return. If a taxpayer files a joint return then they cannot file a separate return for that year after the due date of that return. Professional tax preparers can be very beneficial when considering filing married filing separately.