It’s not uncommon for us to get this question. However, because people sometimes don’t know the nuances of how a tax return is actually filed, this one can get lost in translation. In this post on our sister site we discuss the filing status options for those who are married. In summary, if you are legally married then your options are Married Filing Joint (together) or Married Filing Separate. So where does this whole claiming a spouse as a dependent thing come in? Read on.
When you file a tax return, you are allowed to claim an exemption, which will reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For tax year 2015, the IRS recently announced that each exemption will be worth $4,000 on your 2015 tax return. That means that if you file with your spouse and had no dependents, you would claim 2 exemptions. If you had dependents, you would claim the 2 exemptions for you and your spouse and then 1 additional exemption for each dependent. Clear right? So now the question about your spouse being claimed as a dependent.
As we stated above, when you are married you only have two choices when it comes to filing status. As such, your spouse is never considered your dependent. Thus, on a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you would normally claim just the exemption for yourself. However, if you’re filing a separate return, you may claim the exemption for your spouse only if the following three items apply:
- they had no gross income,
- are not filing a joint return,
- and were not the dependent of another taxpayer
We tell most taxpayers that it is usually advantageous for them to file together. Why? Because they will often pay less taxes by doing so due to the fact that the tax brackets for Married Filing Separate are much more narrow that even that of someone filing Single. What we mean is that if you had taxable income of $160,000 and your spouse had $0, you would be in the 28% marginal tax bracket if you filed Married Filing Joint. If you were single with the same income, you would also be in the same 28% bracket. But if you filed Married Filing Separate, you get penalized and are thrown into the 33% tax bracket. Makes sense to file with your spouse even if they have no income right? That’s what we said! However, there are certain instances when you wouldn’t want to file with your spouse. Like when you are due a nice refund and they have a balance with the IRS from some time ago. Then you will want to file separately do the IRS doesn’t take your refund and apply it to their balance due.
So in summary, you can never claim your spouse as a dependent. However, if you are filing as Married Filing Separate, there are some instances when you can claim their personal exemption.