One spouse has significant tax liabilities or risks
This is a difficult subject for many couples to discuss, but it's important to note that if one spouse enters the marriage owing back taxes, both partners become liable once they file a joint return.
Couples in which one or both partners are principals in a business where there are significant tax risks may also wish to file separately, because both spouses are on the hook for any tax liabilities incurred by the other if they file a joint return. Even though there are "innocent spouse relief" measures on the books, the IRS is very strict on when they can apply—and just saying, "he or she never told me about it" isn't enough to erase your liability.
In a similar vein, if one spouse owes unpaid child support or is behind on student loan payments, you run the risk of your tax refund being offset to cover these liabilities if you file a joint return. And if you're on an income-based student loan repayment plan, your payment will be based on your combined income if you file jointly.
One spouse has significant medical expenses
You're allowed to deduct medical expenses above 7.5% of your AGI (adjusted gross income). This is a steep threshold to meet for many high-income couples, but depending on your situation, you may come out ahead filing separately.
For example, Nathan makes $160,000 as a bank VP, and his wife, Sara, earns $40,000 as a kindergarten teacher. Last year, Sara underwent treatment for breast cancer that cost them $14,000 in out-of-pocket expenses. If they were to file jointly, with a combined AGI of $187,750, the couple would not be able to deduct any costs associated with her treatment.
If Nathan and Sara file separately, however, Sara could itemize and deduct most of her medical expenses, which could ultimately lower their overall tax liability.
Again, it's important to run the calculations both ways to determine whether other credits and deductions available to joint filers would offset the advantages itemizing medical expenses before deciding which way to file.
There are trust issues
A word of caution for all couples: If you suspect your spouse is hiding income or engaging in other behaviors that suggest tax evasion, you should give serious thought to filing separately. A joint tax return puts you, your income and your joint assets on the hook for any tax liabilities that result.
And if you believe divorce may be on the horizon, resist the knee-jerk reaction to file a joint return, and think through your options. Separate tax returns can make the financial separation process less complex and consequential.