Should spouses ever file separate tax returns? Most spouses filing separately lose deductions and credits, but if one spouse is in the hole with the IRS, what else are you going to do?Kansas City Star. Even though Congress eliminated the marriage penalty, sometimes it pays for couples to re-examine how they file. There definitely are instances when filing separately might be warranted. one spouse has high medical expenses Separate returns could produce tax savings if one spouse has lots of medical expenses and a low income. By filing separately, the partner with the doctor bills might be more likely to meet the 7.5 percent threshold needed to itemize medical costs married-filing-separate taxpayers face the 28 percent, 33 percent and 35 percent brackets sooner than do single taxpayers. But at lower brackets the difference is negligible. If one spouse itemizes, both must itemize, splitting the items to be listed on a separate Schedule A for each. That means a partner with few deductions couldn’t use the standard amount and might get cheated. Many credits and deductions are forfeited. You can’t take the earned income credit, claim adoption expenses or child and dependent care costs, use educational tax credits or even deduct the interest you paid on a student loan if you’re married and filing separately. If you have children, you might find the child tax credit reduced since it phases out at different income limits for the various filing statuses. And the amount of capital gains losses you can deduct is cut in half.