Choosing the correct filing status is a little more involved than most people think, and your filing status can change in any given year. In order to choose the correct filing status, it’s important to understand all of them.
First, what is the purpose of a filing status?
Your filing status is used to determine the rate at which your income is taxed. It determines your filing requirements, standard deduction, eligibility for certain credits, and your correct tax. It is possible to qualify for more than one filing status. In that case, you would want to choose the filing status that has you paying the least legitimate amount of tax.
Here’s a list of the five filing statuses:
- Single. This status applies if you are not married. It also applies if you are divorced or legally separated under state law on the last day of the tax year.
- Married Filing Jointly. If you are married, you and your spouse can file a joint tax return. On a joint return, you report your combined income and deduct your combined allowable expenses. If your spouse died during the year, you can file a joint return for that year. Your marital status is determined on the last day of the tax year.
- Married Filing Separately. A married couple can choose to file two separate tax returns. This option is appealing if you only want to be responsible for your own tax, or if this option results in less tax than a joint tax return. You may want to prepare your taxes both ways before you choose. If you choose to file MFS and one person itemizes deductions the other person is required to itemize as well (even if he/she has no deductions to itemize).
- Head of Household. In most cases, this status applies if you are unmarried or considered unmarried on the last day of the year, you paid more than half the cost of keeping up a home for yourself for the year, and a qualifying person lived with you in the home for more than half the year. Exception: A dependent parent does not have to live with you.
- Qualifying Widow(er) with a Dependent Child. Taxpayers who do not remarry in the year their spouse dies can file jointly with the deceased spouse. For the two years following the year of death, the surviving spouse may be able to use the Qualifying Widow(er) filing status. To qualify, the taxpayer must:
- Be entitled to file a joint return for the year the spouse died, regardless of whether the taxpayer filed a joint return that year.
- Have had a spouse who died in either of the two prior years. The taxpayer must not remarry before the end of the current tax year.
- Have a child, stepchild, or adopted child who qualifies as the taxpayer’s dependent for the year or would qualify as the taxpayer’s dependent except that he or she does not meet the gross income test, or does not meet the joint return test, or except that the taxpayer may be claimed as a dependent of another taxpayer.
- Live with this child in the taxpayer’s home all year, except for temporary absences.
- Have paid more than half the cost of keeping up the home for the year.
- A foster child does not qualify a taxpayer for the Qualifying Widow(er) filing status.
There is an Interactive Tax Assistant that can help you determine your filing status on the IRS website.
If you need tax assistance, contact one of our Peoples Tax professionals today! Call us at (804) 204-1040 or email us to schedule an appointment! We are available in person in our RVA tax prep offices, or you can meet with one of our RVA tax pros virtually! All of our tax returns are backed by our Triple Guarantee of accuracy, year-round assistance, and your satisfaction – or you pay no fee!