Understanding Your Filing Status

Choosing the right filing status will result in your lowest income tax

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You have one and only one filing status. Your filing status is determined in large part by whether you were considered married at the end of the year.

What Is a Filing Status?

A person's filing status determines which tax rates and which standard deduction amounts apply to a specific tax return.

This determination is mostly affected by what that person's marital status is on the last day of the year.

If you are married on the last day of the year, you are considered married for tax purposes for that year.

If you are not married on the last day of the year, you are considered not married for tax purposes for that year. There are special situations where married persons can be "considered unmarried" for purposes of qualifying for the Head of Household status even if they are not legally divorced or separated.

Single Filing Status

The single filing status is used by people who are unmarried on the last day of the year. Single taxpayers who can claim a dependent may be eligible for the Head of Household filing status, which will provide more tax benefits.

Head of Household Filing Status

If you are single and have been taking care of a dependent for more than six months, you may be eligible for the Head of Household filing status (HOH). This filing status benefits from a higher standard deduction and lower tax rates than those who are just "single" filers.

The criteria are strict, as only certain types of closely-related dependents will qualify a taxpayer for HOH status. Additionally, under certain circumstances, a married person with a dependent might qualify for HOH if he or she has been living apart from his or her spouse for the last six months of the year or more.

Qualifying Widow/Widower With Dependent Child Filing Status

If you are unmarried because your spouse died within the year, you can still file jointly or separately as a married person for that year, whether or not you have a dependent. After the initial year of death, if you are still unmarried and have a dependent child, then you can file under the Qualifying Widow/Widower (QW) filing status.

This filing status will allow you to continue benefiting from the same standard deduction and the same tax rates as for married couples filing jointly. You can claim QW filing status for a total of two years. If you are still unmarried after those two years, your filing status changes to single or head of household.

Surviving Spouse

In the year that your spouse dies, you can file Married Filing Jointly or Married Filing Separately. For the next two years, you may file as Qualifying Widow. You must have at least one child as a dependent. If you remarry, you cannot file as Qualifying Widow. Instead, you would file using one of the married filing statuses.

Married Filing Jointly Filing Status

If you are married, you may choose to file one tax return jointly with your spouse. A joint tax return combines the incomes and deductions of each spouse. To file jointly, both you and your spouse must agree to file a joint tax return, and both must sign the return. Married Filing Jointly (MFJ) provides more tax benefits than filing separately.

Married Filing Separately

If you are married, you and your spouse may file separate tax returns. Married filing separately (MFS) taxpayers have the least beneficial tax treatment. But MFS status is the one way to achieve separate tax liabilities, which is a benefit not to be overlooked. Married taxpayers should carefully consider whether filing joint or separate returns will be most beneficial for their unique financial situation.

Reasons for married couples to file separately: There are very good reasons for husbands and wives to file their tax returns separately. Some good reasons for filing separately include:

  • One spouse wants to file taxes, but the other doesn't want to file.
  • One spouse suspects that the joint return might not be accurate.
  • One spouse doesn't want to be held responsible for the payment of tax shown on the joint return.
  • One spouse owes taxes, and the other would get a refund.
  • Spouses are separated, but not yet divorced, and they wish to keep their finances as separate as possible.

When you are filing separately, you must still cooperate and share tax information. If you both have children, you must coordinate who gets to claim the children as dependents.

Finally, spouses filing separately must both take the standard deduction or must both itemize their deductions. People who choose to file as Married Filing Separately do not qualify for several tax benefits and tax credits. While filing jointly can in some cases result in lower federal tax, filing separately creates separate tax liabilities for each spouse, which can be useful in minimizing tax risks.