Married filing....Single?

[MrMook]

Ok, I can't tell if I just woke myself up by splashing cold water on my face, or leaped into a pot of hot water. I need some outside perspective.

Long story short: Due to an income-based repayment plan that my wife is enrolled in for some school loans, we've been filing as "Single" for the past few years we've been married. This is to avoid high monthly loan payments (based on household income) which at this time would be impossible for us to make (despite the urgent need to bazooka this particular loan).

It just occurred to me last night, while preparing my own return, that we may have been doing this wrong (perhaps very wrong), and "Married Filing Separately" might instead be the proper way to do this. Have we in fact been filing wrong? And if so, do we just move forward filing correctly, or do we need to amend returns for the past few years?

[CareCPA]

Yes, if you are married, then you should have filed as MFS.
To be correct, you should amend. Expect to owe taxes, as the tax laws are much less favorable to MFS vs filing single.

[MrMook]

Thats what I figured. I'll start the amendment process, and file correctly from now on. Thanks!

[dandarc]

So yeah, separately.

Seems every time I hear someone who is married say "we file separately", "because student loans" is the reason.  Given the major downsides to filing separately (no IRA deductions, although you can do a backdoor Roth; several potential credits and deductions go away; if your incomes are unequal, you're probably paying more in tax to do this), makes having a plan to get these loans paid off or forgiven an important thing.