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Publication 555

Preparing a Federal Income Tax Return(p9)

The following discussion does not apply to spouses who meet the conditions under Spouses living apart all year, discussed earlier. Those spouses must report their community income as explained in that discussion.

Joint Return Versus Separate Returns(p9)

Ordinarily, filing a joint return will give you a greater tax advantage than filing a separate return. But in some cases, your combined income tax on separate returns may be less than it would be on a joint return.
The following rules apply if your filing status is married filing separately.
  1. You should itemize deductions if your spouse itemizes deductions, because you cannot claim the standard deduction,
  2. You cannot take the credit for child and dependent care expenses in most instances,
  3. You cannot take the earned income credit,
  4. You cannot exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses,
  5. You cannot take the credit for the elderly or the disabled unless you lived apart from your spouse all year,
  6. You may have to include in income more of any social security benefits (including any equivalent railroad retirement benefits) you received during the year than you would on a joint return,
  7. You cannot deduct interest paid on a qualified student loan,
  8. You cannot take the education credits,
  9. You may have a smaller child tax credit than you would on a joint return, and
  10. You cannot take the exclusion or credit for adoption expenses in most instances.
Figure your tax both on a joint return and on separate returns under the community property laws of your state. You can then compare the tax figured under both methods and use the one that results in less tax.

Separate Return Preparation(p9)

If you file separate returns, you and your spouse must each report half of your combined community income and deductions in addition to your separate income and deductions. List only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc.). The same reporting rule applies to RDPs and individuals in California who are married to an individual of the same sex. For a discussion of the effect of community property laws on certain items of income, deductions, credits, and other return amounts, see Identifying Income, Deductions, and Credits, earlier.
Attach a worksheet to your separate returns showing how you figured the income, deductions, and federal income tax withheld that each of you reported. The Allocation Worksheet (Table 2) shown later can be used for this purpose. If you are a RDP or an individual in California married to an individual of the same sex, you may want to write the social security number of your partner or same-sex spouse in the "Notes" section of the worksheet to avoid delays in the processing of your return. If you do not attach a worksheet, you and your spouse (or RDP/California same-sex spouse) should each attach a photocopy of the other spouse's (or RDP's/California same-sex spouse's) Form W-2, Wage and Tax Statement, or 1099-R, Distributions From Pensions, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Make a notation on the form showing the division of income and tax withheld.

Extension of time to file.(p10)

An extension of time for filing your separate return does not extend the time for filing your spouse's (or RDP's/California same-sex spouse's) separate return. If you and your spouse file a joint return, you cannot file separate returns after the due date for filing either separate return has passed.
Table 2. Allocation Worksheet
Total Income
Allocated to
Spouse, RDP, or California Same-Sex Spouse #1
Allocated to
Spouse, RDP, or California Same-Sex Spouse #2
1.Wages (each employer)   
2.Interest Income (each payer)   
3.Dividends (each payer)   
4.State Income Tax Refund   
5.Capital Gains and Losses   
6.Pension Income   
7.Rents, Royalties, Partnerships, Estates, Trusts   
8.Taxes Withheld   
9.Other items such as: Social Security Benefits, Business and Farm Income or Loss, Unemployment Compensation, Mortgage Interest Deduction, etc.    


Walter and Mary Smith are married and domiciled in a community property state. Their two children (18-year-old twins) and Mary's mother live with them and qualify as their dependents. Amounts paid for their support were paid out of community funds.
Walter received a salary of $65,424. Income tax withheld from his salary was $6,356. Walter received $132 in taxable interest from his savings account. He also received $217 in dividends from stock that he owned. His interest and dividend income are his separate income under the laws of his community property state.
Mary received $200 in dividends from stock that she owned. This is her separate income. In addition, she received $13,400 as a part-time dental technician. Income tax withheld from her salary was $1,352.
The Smiths paid a total of $7,775 in medical expenses. Medical insurance of $2,050 was paid out of community funds. Walter paid $5,725 out of his separate funds for an operation he had.
The Smiths had $10,264 in other itemized deductions, none of which were miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. The amounts spent for these deductions were paid out of community funds.
To see if it is to the Smiths' advantage to file a joint return or separate returns, a worksheet (Table 3, shown next) is prepared to figure their federal income tax both ways. Walter and Mary must claim their own exemptions on their separate returns.
The summary at the bottom of the worksheet compares the tax figured on the Smiths' joint return to the total tax figured by adding the tax amounts on their separate returns. By filing separately under the community property laws of their state, the Smiths save $289 in income tax.
If the Smiths were domiciled in Idaho, Louisiana, Texas, or Wisconsin, the result would be slightly different because in those states income from separate property generally is treated as community income. If they lived in one of those states, the interest from Walter's savings account and the dividends from stock owned by each of them would be divided equally on their separate returns.
In figuring your tax, use the amounts from your current tax forms instruction booklet for items such as the standard deduction, exemption allowance, and Tax Table tax. The amounts used in this example apply for 2011 only. The example shows how filing separate returns under community property tax laws can result in lower tax than filing jointly; you must figure your own tax both ways to know which works better for you.

Table 3. Worksheet — Walter and Mary Smith

 Joint ReturnSeparate Returns
Income (Walter's):      
 Salary$ 65,424 $ 32,712 $ 32,712 
 Interest and dividends ($217 dividends + $132 interest)349 349 –0– 
 Total $ 65,773 $ 33,061 $ 32,712
Income (Mary's):      
 Salary$ 13,400 $ 6,700 $ 6,700 
 Dividends200 –0– 200 
 Total 13,600 6,700 6,900
Adjusted gross income (AGI) $ 79,373 $ 39,761 $ 39,612
 Community: (Not subject to the 2% AGI limit) $ 10,264 $ 5,132 $ 5,132
  Premiums$ 2,050 $ 1,025 $ 1,025 
  Medical expenses (Walter's)5,725 5,725 –0– 
 Total$ 7,775 $ 6,750 $ 1,025 
 (Minus) 7.5% of AGI(5,953) (2,982) (2,971) 
 Medical expense deduction $ 1,822 $ 3,768 $   –0–
Total deductions $ 12,086 $ 8,900 $ 5,132
Subtract total deductions from AGI1,2 $ 67,287 $ 30,861 $ 34,480
Exemptions1,3 (Subtract to find taxable income)   $(18,500) $ (7,400) $ (11,100)
Taxable Income $ 48,787 $ 23,461 $ 23,380
Tax1,4 $  6,466 $ 3,096 $ 3,081
Federal income tax withheld $  7,708 $ 3,854 $ 3,854
Overpayment (Subtract from Federal tax withheld)  $  1,242 $  758 $  773
1 Caution: In figuring your tax, use the amounts from your current tax forms instruction booklet for such items as the standard deduction, exemption allowance, and Tax Table tax.
2 The itemized deductions are greater than the standard deduction (shown here as $11,600 for married filing jointly and $5,800 for married filing separately). Note: If one spouse itemizes, the other must itemize, even if one spouse's deductions are less than the standard deduction.
3 An allowance of $3,700 for each exemption claimed is subtracted — 5 on the joint return, 2 on Walter's separate return, and 3 on Mary's separate return.
4 The tax on the joint return is from the column of the 2011 Tax Table for married filing jointly. The tax on Walter's and Mary's separate returns is from the column of the 2011 Tax Table for married filing separately.
Table 3. Summary
Tax on joint return $ 6,466
Tax on Walter's separate return$ 3,096 
Tax on Mary's separate return3,081 
Total tax filing separate returns $6,177
Total savings by filing separate returns $289