Benefit of Filing Separately?

Today TaxMama® hears from AK in the TaxQuips Forum, who is trying to understand. “My wife and I have 1 child who is 3 years old. We recently received our W2’s and I started the process through Turbotax online.  With just my income, it looked like we were going to receive the Earned Income Credit (EIC). Once I entered my wife’s W2, the EIC dropped quite a bit. I started digging through the deductions and credits, and discovered that we are about a $1000 over the qualifying income to receive the EIC with 1 child. However, if either my wife, or I claim our daughter as a dependent, and file separate tax returns, we would qualify for it. My question is: What are the major pro’s and con’s of filing separately with a child in the mix – and is that even an option?”


Dear AK,

The major ‘con’ of this is
1) When you file as married filing separately, the EIC is not available at all.
2) If either of you file as single or head of household, that would be tax fraud.
Aside from penalties, you would lose the right to claim the EIC at all for up to 10 years.

I know, you didn’t realize that. So, I am sure this news to you.

The ‘pros’?  I can’t think of a single one.

You are not in a financial bracket or situation where filing separately will give you any benefits. You would only lose benefits. Good try though.

And remember, you can find answers to all kinds of questions about refundable tax credits and other tax and business issues, free. Where? Where else? At

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3 thoughts on “Benefit of Filing Separately?

  1. mgriffin24 says:

    Well done, both of you! Good to know. Thanks for the “different” kind of question, that most of us wouldn’t think of. And thanks for the terrific knowledge provided. Who knew it was tax fraud? GOOD JOB.

  2. TaxMama says:

    You’re not?

    Well, Wanda, you’re doing a pretty good job!

    Yeah, you’re right.
    I haven’t prepared a return with an EIC in at least a decade.
    So I looked up the page in the IRS website, expecting it to tell me that the EIC is based on the amount of earned income, the amount of investment income and adjusted gross income.
    It was a bit of a surprise that the amount of earned income (wages/SE income) was not a qualifier. So, I thought, OK, you could get away with it.

    But that didn’t feel right.
    So I tested in the software to see.
    (Which is what I would do with a client in real life AND check the detail in the worksheet to see if it made sense.) And nope, reducing AGI doesn’t give rise to an EIC if your wages are already above the earned income limit.

    You’re also right.
    With a bit of planning, they could have put money into a 401(k) and reduced their AGI that way. That does bring their income down low enough to qualify. AND it generates the Savers Credit.

    Well done!


  3. wb says:

    I’m no tax expert, but since the EIC is based on earned income, couldn’t they have avoided this by contributing to a 401(k) since that is excluded from taxable earnings? Don’t know if just putting it into a traditional IRA would help. If so, they still have time to do that before their tax return is due.

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