Filing Jointly vs Separately for 2024 Tax Filing with S Corp Spouse - Need Help!

I could use some advice about our 2024 taxes. Got married in July 2024 and also relocated for a new job opportunity. Both of my positions during 2024 were W-2 employment. My spouse works as a graphic designer with an LLC that's filing as an S Corp. We initially thought filing separately would be the best route since we weren't married for the entire year. However, as I'm working through my tax software, it's telling me that if we file separately, we both need to choose the same deduction method - either we both itemize or we both take the standard deduction. This is confusing me because my spouse obviously needs to itemize for their business expenses, but I don't really have anything to itemize and the standard deduction would be better for me. Does this rule actually exist? I thought the whole point of filing separately was that we could each choose what works best for our individual situations. Are we missing something here or misunderstanding the rules? Any insight would be super helpful before we finalize everything!

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19 comments

Miguel Diaz

•8M

Yes, this is actually a real rule that surprises a lot of newly married couples! When you file as "Married Filing Separately," both spouses must either take the standard deduction or both must itemize. It's one of those quirky tax rules that doesn't seem intuitive. If your spouse itemizes deductions on their return, you must also itemize on yours - even if your standard deduction would be higher. This is specifically mentioned in IRS rules to prevent certain types of tax advantages. Since your spouse has the S Corp, there's an important distinction to make: Business expenses for the S Corp are reported on the business tax return (Form 1120-S), not as itemized deductions on your spouse's personal return. The business expenses reduce the business income that flows through to your spouse's personal return. Itemized deductions are personal expenses like mortgage interest, charitable contributions, etc. So your spouse might not actually need to itemize on their personal return unless they have substantial personal deductions that exceed the standard deduction amount.

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Miguel Diaz

•8M

That's exactly right! Business expenses for an S Corp are reported on the business tax return (Form 1120-S), not as itemized deductions on a personal return. The S Corp calculates its net income after all business expenses, and then that net income flows to your spouse's personal tax return via Schedule K-1. The personal decision to itemize or take the standard deduction is completely separate from business expenses. So yes, you could both take the standard deduction on your personal returns while still fully deducting all legitimate business expenses on the S Corp return. Many business owners find that the standard deduction is actually better for their personal returns unless they have significant mortgage interest, medical expenses, or charitable donations.

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Zainab Ahmed

•8M

After struggling with a similar situation last year (spouse with business, me with W-2), I discovered https://taxr.ai and it was seriously a game-changer. I uploaded our documents, and their AI system analyzed everything and explained exactly what filing status would save us the most money. It highlighted that my spouse's business expenses were handled on the business tax forms (not personal itemized deductions) and showed us how much we'd save by filing jointly vs separately. The analysis made our decision super clear and saved us from making a costly mistake. Their explanations about how S Corp income flows to personal returns was way easier to understand than what our previous accountant told us.

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Zainab Ahmed

•8M

It handled the S Corp situation perfectly. The system recognized all the business income from the K-1 and clearly separated it from personal tax decisions. It actually does both - it explains all your options AND recommends which filing status would be optimal based on your specific numbers. For accuracy, I was really impressed. I actually had my returns reviewed by our accountant after using taxr.ai and he confirmed everything was done correctly. The system caught several deductions I would have missed and explained exactly why we qualified for them with references to specific tax codes. It was definitely more thorough than my previous experiences with generic tax software.

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Yara Abboud

•8M

I was really skeptical when I first heard about taxr.ai on this forum (like I mentioned in my earlier comment), but I decided to give it a try since I was in almost the exact same situation - W-2 employee married to someone with an S corp. Honestly, I was blown away. It quickly identified that we were confused about business expenses vs personal itemized deductions and explained everything clearly. It spotted that we could both take the standard deduction while still deducting all the legitimate business expenses on the S Corp return. The analysis showed we'd save about $2,800 by filing jointly rather than separately, which was the opposite of what we expected. The system explained exactly why with a side-by-side comparison. Well worth checking out if you're confused about the S Corp/married filing options.

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PixelPioneer

•8M

If you're getting stuck trying to reach the IRS for clarification on this married filing separately with S Corp issue, try https://claimyr.com - they've been a lifesaver for me. After trying for THREE DAYS to reach someone at the IRS about a similar filing status question, I was about to give up. With Claimyr, I got connected to an actual IRS agent in about 15 minutes who walked me through exactly how the married filing separately rules work with business owners. They have this system where they wait on hold for you and call when an agent picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed everything about standard vs. itemized when filing separately and explained how my wife's business income worked with our filing options. Saved me hours of frustration and potentially filing incorrectly.

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PixelPioneer

•8M

They use a system that keeps trying different IRS phone lines and stays on hold so you don't have to. You just go about your day until they text you that an agent is on the line. Then you jump on the call and talk directly to the IRS agent. It's your conversation with the IRS - they just handle the painful hold time for you. It's definitely something you could theoretically do yourself if you had hours to waste on hold, but most people (especially business owners) value their time more than that. And yes, it really does work - the average wait time for me was about 15 minutes, but obviously it can vary depending on call volume. Still WAY faster than trying to call directly yourself, where wait times can be 2+ hours if you even get through at all.

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Paolo Rizzo

•8M

I feel completely ridiculous posting this update. After ranting about how Claimyr couldn't possibly work, I was desperate enough to try it last night. I was 100% prepared to come back here and call them a scam. Well, I have to eat my words. Got through to an IRS agent in about 22 minutes. The agent confirmed exactly what others have said here - my spouse's S Corp business expenses aren't considered "itemizing" on our personal return, and we could both take the standard deduction while still writing off all legitimate business expenses on the S Corp return. They also explained that while we could file separately, we'd likely save more by filing jointly even though we weren't married the full year. The "married on December 31st" rule means the IRS considers you married for the ENTIRE tax year regardless of when the wedding happened. So yeah, I was wrong. And now I'm actually going to save money on my taxes AND the headache of filing separately.

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Amina Sy

•8M

For us, it was a combination of factors. The biggest benefit came from the difference in tax brackets - my income "filled up" the lower brackets when combined with some of my husband's income, which kept more of our total income in lower tax brackets than if we filed separately. We also qualified for some credits that are either reduced or eliminated when filing separately, including the child and dependent care credit (which we needed for our daughter). Plus, filing separately would have meant losing some of our itemized deductions due to the percentage of AGI thresholds. When we ran both scenarios, jointly saved us about $3,200.

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