Your tax software automatically defaults to “Married Filing Jointly” the moment you indicate a client is married. Your training taught you that joint returns almost always produce better tax outcomes. Your clients assume that filing together is not just preferred, but somehow more “correct” than filing separately.
Here’s what most practitioners miss: the legal hierarchy works in reverse of what we assume.
This insight comes from Jeremy Wells on his Tax in Action: Practical Strategies for Tax Pros podcast, where he walks through one of the most misunderstood areas in tax practice. The reality? Filing separately isn’t the alternative—it’s the legal default under the tax code. Joint filing is an election under Code Section 6013 that requires both spouses’ explicit consent. If either spouse refuses, both must file separately, period.
While tax software defaults to married filing jointly and most practitioners assume it’s always the better choice, understanding the actual legal framework changes how you approach married clients—especially when non-tax factors create situations where paying more in taxes delivers better overall financial outcomes.
Understanding the Legal Framework Behind Filing Decisions
The foundation of smart filing decisions starts with grasping what the law actually says versus what practice assumes. Code Section 6013 doesn’t make joint filing automatic. It allows couples to “jointly elect” to file together if both spouses agree.
“Filing separately is actually the default,” Wells says. ”If it weren’t for code section 6013, we would have all married couples filing separate returns.” Without this specific code section creating the joint filing option, every married person in America would file individually.
Yet tax software creates false defaults that completely reverse this legal structure. The moment you indicate a client is married, the software assumes joint filing “to the point at which we have to backtrack whenever a situation comes up that might lead us to consider filing separate returns instead.”
This backward approach means we assume joint filing is normal and treat separate filing as the exception that needs justification. But legally, it works the other way around. Joint filing is the special election that both spouses must actively choose.
Wells explains, “The joint return, although it tends to produce the better result from a tax perspective, isn’t the default.” The better tax result doesn’t automatically make it the legal starting point.
Understanding this legal framework becomes crucial in situations involving financial disagreement, pending divorce, or simple disagreement between spouses. One spouse cannot force the other into a joint return, and that protection exists precisely because the law treats separate filing as the baseline position.
This legal reality also affects how you approach client conversations. Instead of asking “Why would you want to file separately?” you might ask “Do you both want to elect joint filing?” It’s a subtle shift that acknowledges the actual legal structure while opening space for clients to express concerns they might not otherwise voice.
The Tax Code’s Systematic Push Toward Joint Returns
Understanding why the tax code penalizes separate filers reveals both the logic behind joint filing’s popularity and the threshold where those penalties become acceptable costs for better overall outcomes.
The most immediate impact comes through tax rates and brackets. “Tax rates tend to be lower on a joint return,” Wells explains. Separate return brackets are higher but also smaller, meaning “more income being taxed at lower marginal rates” on joint returns, creating “a relatively lower effective rate across the returns.” For many couples, this difference alone can mean several thousand dollars in additional taxes when filing separately.
But the real penalties come from eliminating or restricting credits and deductions. The earned income credit, American Opportunity credit, and lifetime learning credit simply disappear for separate filers. Other credits have their income limitations cut in half. For example, the child tax credit and retirement savings contributions credit phase out at income levels that are 50% of joint return thresholds.
The Roth IRA contribution restriction is perhaps the most puzzling example. “Contributions to Roth IRAs are phased out for a modified AGI of just $10,000 for separate returns,” Wells notes. “This, honestly, is one of the provisions that really just confuses me… I’m not really sure what the justification for that is.” The practical effect? Most working couples filing separately simply cannot contribute to Roth IRAs at all.
Wells points out other significant restrictions. The state and local tax (SALT) cap drops from $10,000 for joint filers to just $5,000 for separate filers, even though single filers get the full $10,000 cap. The capital loss deduction gets cut in half from $3,000 to $1,500, and the student loan interest deduction disappears entirely for separate filers.
The “itemization trap” creates another layer of complexity. If one spouse itemizes deductions, the other spouse must also itemize—they cannot claim the standard deduction. This creates challenges when his firm prepares a return for one spouse but cannot get information about the other spouse’s filing decisions. “If we just don’t know, then we go with the approach that is most advantageous to the taxpayer we’re working with. But we issue a strong caveat.”
These disadvantages create what Wells calls a “preference” toward joint filing that has become so assumed that practitioners often don’t consider separate filing until specific problems arise. Yet understanding these penalties helps identify situations where accepting them delivers superior overall results.
When Separate Filing Makes Financial Sense
The mark of sophisticated tax practice isn’t finding the lowest tax liability; it’s delivering the best overall financial outcome for clients. Sometimes that means recommending the higher-tax option.
“Our job as tax professionals is not always to prepare the simplest, most tax-efficient return possible… Sometimes, our job is to advise the taxpayer on the options and tradeoffs and help them achieve the best overall result for their personal and financial needs.”
Student loan income-based repayment plans drive most separate filing decisions in modern practice. “Nine out of ten times when we file married filing separate returns in our firm, it’s because of student loan income-based repayment plans,” Wells says. These plans calculate monthly minimums based on the borrower’s tax return income. File jointly with a high-earning spouse, and those monthly payments can become unaffordable.
The financial impact often dwarfs any tax savings from joint filing. When one spouse owes substantial student loans while the other earns significant income, filing separately might increase taxes by $2,000 but reduce annual loan payments by $6,000, creating a net benefit of $4,000 for choosing the “higher tax” option.
Wells addresses practitioner hesitation about this strategy: using filing status as a tool to achieve a financial goal is completely legitimate. It absolutely is proper tax planning, he emphasizes. There’s no ethical concern, no audit risk, no regulatory problem. It’s smart financial planning that considers the complete picture.
Financial protection scenarios create another category where separate filing is advantageous. When couples face “disagreement, mistrust, or even financial abuse,” separate filing is about financial survival and legal protection.
Both spouses on a joint return become “jointly and severally liable for the tax liability,” meaning either spouse can be held responsible for 100% of any tax debt. This remains true even after divorce. IRS collection efforts don’t respect divorce decree assignments of tax liability because the IRS was never a party to that agreement.
Treasury offset protection is another practical application. When one spouse defaults on student loans, the federal government can garnish the entire joint refund to pay that debt. “Filing separately could protect that spouse’s refund… Getting some of that refund with a separate return could be a better result than having the entire refund garnished by the student loan lender,” Wells explains.
Separate filing may also unlock better results for AGI-limited deductions. The 7.5% AGI threshold for medical expenses is much more achievable when calculated against one spouse’s lower individual income rather than the couple’s combined AGI. Wells notes this same principle applies to casualty losses at 10% of AGI.
“Tax filing status is never a reflection of the couple’s marriage or relationship,” Wells explains, countering clients’ concerns that separate filing might signal relationship problems. “There’s nothing wrong about filing separate returns. Nobody looks at separate returns and thinks that’s an indication of something wrong with your marriage.”
Professional Implementation and Practice Management
The realities of implementing separate filing strategies reveal professional challenges beyond tax calculations. Wells shares insights from his firm’s experience that help practitioners navigate these complex decisions effectively.
One fundamental challenge involves timing and irrevocability. Wells explains the common saying, “A couple can make up, but they can’t break up.” Once you file jointly and pass the filing deadline, you generally cannot switch to separate returns. However, the reverse is possible. Separate filers can amend to joint returns within the statute of limitations.
There are limited exceptions to this rule. Couples can file a superseding return before the unextended due date to switch from joint to separate. They can also amend joint returns to separate if the marriage gets annulled, if one spouse can prove the joint return was signed under duress, or if both taxpayers didn’t properly sign the joint return. However, these exceptions require a substantial legal burden of proof.
Technology can streamline the analysis process, as professional tax software includes joint versus separate worksheets. These comparison tools show four columns: the joint return result, each spouse individually as if filing separately, and the combined result of two separate returns. “Usually it’s not an insignificant amount of money. A lot of times we see several thousand dollars” in savings from joint filing, Wells notes.
Wells uses these worksheets for quality control. “That comparison can actually help work through whether or not we’ve made an error.” For example, if all wages show under one spouse and none under the other, it might indicate misallocated W-2s that could incorrectly trigger Social Security overpayment calculations.
Wells describes a specific error his firm caught this way. “I have mislabeled those W-2s and that’s triggered a calculation of that excess Social Security tax paid.” Since Social Security overpayment calculations work on an individual basis, not a joint return basis, misallocating W-2s between spouses can create incorrect refund calculations that later generate IRS notices.
Conflict of interest considerations are crucial when working with couples contemplating separation or divorce. “Working with a married couple that is on the rocks might cause a conflict of interest, especially if the firm started working with one spouse before the couple got married,” Wells explains. Some firms require written waivers, while others simply refuse to work with both spouses during contentious situations.
Different firms handle separate filing preparation differently. Wells notes that some treat separate returns as completely independent engagements with separate fees for each spouse. Others charge for three returns when preparing both joint and separate scenarios. The key is establishing clear policies before these situations arise.
Transforming Client Relationships Through Strategic Tax Planning
The separate filing decision is sophisticated tax practice at its best, where technical knowledge meets strategic thinking to deliver advice that considers clients’ complete financial circumstances rather than just tax calculations.
Wells’ approach demonstrates how understanding these concepts transforms client relationships. Instead of simply optimizing tax calculations, you help clients navigate complex financial decisions that affect their long-term financial health. You become the advisor who understands that sometimes paying more in taxes is the smartest financial move.
Client education is crucial for successful implementation. Wells often encounters clients who resist separate filing because they believe it signals relationship problems or creates complications. Having clear, confident responses to these concerns, backed by a solid understanding of the legal framework, positions you as the expert who can cut through confusion.
“Our job as tax professionals is not always to prepare the simplest, most tax efficient return possible,” Wells says. “Sometimes, our job is to advise the taxpayer on the options and tradeoffs and help them achieve the best overall result for their personal and financial needs.”
This philosophy requires moving beyond traditional tax optimization to consider complete financial circumstances. When you can save a client thousands in student loan payments by recommending separate filing (even while paying extra taxes), you’ve delivered genuine strategic value that differentiates sophisticated tax professionals from basic return preparers.
The separate filing decision crystallizes everything that makes tax planning both challenging and valuable: technical complexity, client relationship management, strategic thinking, and the wisdom to optimize for outcomes rather than just tax calculations. It’s where true tax professionals prove their worth by delivering advice that transforms clients’ financial lives.
Ready to master these strategic filing decisions that could save your clients thousands while protecting them from significant financial risks? Listen to Jeremy Wells walk through the complete framework for navigating married filing status elections, including real-world examples and technical details that will change how you approach these decisions.