Published by AE Tax Advisors Team • 2026-04-03

Incorrect Filing Status Corrected -- $18,000 Per Year Recovered

The Client

David and Christine Park, a married couple in Philadelphia, Pennsylvania, had been filing Married Filing Separately (MFS) for four years on the advice of a family member who believed it would reduce their combined tax burden. David earned $165,000 as an engineer and Christine earned $88,000 as a teacher.

The Problem

Filing MFS at their income levels was costing the Parks significantly more in taxes. MFS eliminates access to the Earned Income Tax Credit, student loan interest deduction, and education credits. It also applies higher tax rates on lower income thresholds and eliminates the Child Tax Credit phase-out benefit for their two children. The Parks were overpaying by approximately $18,000 per year.

Our Strategy

We prepared amended returns changing the filing status to Married Filing Jointly (MFJ) for the three most recent years (the fourth year was beyond the amendment window). We recalculated their tax liability under MFJ, properly applying the standard deduction, Child Tax Credits, and favorable bracket thresholds. We also optimized their withholding going forward.

The Results

The three amended returns recovered $54,000 in total -- $18,000 per year of overpaid taxes. The Parks also adjusted their W-4 withholding to increase their take-home pay by $1,500 per month going forward. They used the recovered funds to pay down their mortgage.

Key Takeaway

Married Filing Separately is rarely beneficial unless one spouse has significant medical expenses or student loan repayment under an income-driven plan. Most married couples pay substantially more in taxes under MFS than MFJ.