It’s critical to select the correct filing status when you complete your tax return. The status you choose may impact how much tax you pay for the year, and it also affects whether or not you must submit a return. Keep in mind that your marital status on December 31st is valid for the whole year.
Before submitting your annual federal tax return, you may choose from the following:
- Single status,
- Married Filing Jointly status,
- Married Filing Separately status,
- Head of Household status, or
- Qualifying Widow(er) With Dependent Child status.
How do I determine which filing status to choose?
Your filing status depends in part on your marital status on December 31st. If you’re not married, you can only choose single or head of household, and if you have a qualifying child, then your child can qualify you for the head of household filing status.
Single: You can file as single if you were unmarried or legally separated from your spouse on the last day of the tax year. You may also qualify to file as single if you were widowed during the tax year but re-wedded before the end of the tax year.
Married Filing Jointly: You can file a tax return jointly with your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. The same applies if you’re a nonresident or resident alien and your spouse had no earned income.
Married Filing Separately: If you and your spouse decide to file separate returns, the tax law treats you as unmarried and requires you to use the Single status on Form 1040. Your combined income and deductions must be divided between both tax returns under this status.
Head of Household: You can file as head of household if you were unmarried or legally separated from your spouse on the last day of the tax year, you paid more than half the cost of maintaining a home for yourself and a qualifying person, and a qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school).
Qualifying Widow(er) With Dependent Child: You can file as a qualifying widow(er) with a dependent child if your spouse died during either of the two tax years immediately preceding the current tax year, you have not remarried, and you can claim an exemption for your deceased spouse.
Remember that these filing statuses are based on taxable income. If you aren’t sure which status to use, it might be best to file as single. However, if your income is close to the limit for being required to file an income tax return, you might be able to lower your tax by filing as head of household or qualifying widow(er) with a dependent child.
Does the Filing Status Make a Difference?
If you’re married, you and your spouse may file a joint return or separately on two separate returns under the status of married filing jointly or married filing separately. Only one of you needs to meet the requirements for the head of the household status, but only if there’s a qualifying person who lives with you more than half of the year and meets certain other conditions.
The differences in tax rates, standard deduction, and exemptions for each status all play a role in determining which status to use.
For example, if you’re single and have a taxable income of $32,000 for the year, you would pay $5,739.50. If you were married and filed a joint return for the same amount, you would only pay $4,428.75 at the end of the year under the married filing jointly status.
Why Does the Correct Filing Status Matter?
There are a few reasons why it’s important to file under the correct status.
First, each filing status has its own tax rates, standard deduction, and exemptions. Filing under the incorrect status can lead to you paying more or less in taxes than you should.
Second, some tax benefits are only available to taxpayers who file under certain statuses. For example, if you’re eligible for the head of household filing status, you may be able to claim a larger standard deduction and higher tax credits than you would if you filed as single.
Finally, the IRS may impose penalties if you file under the incorrect status. So it’s important to research which filing status is best for your situation and use the correct one on your tax return.
There are a few things to consider when choosing your filing statuses, such as the different tax rates, standard deductions, and exemptions associated with each. In some cases, it might be beneficial to file under a specific status even if you don’t meet all of the requirements.
However, if you’re not sure which status to choose, it’s best to consult with a tax professional at The Oasis Firm. This South Florida-based company assures every client of red carpet financial services all year-round.
Frequently Asked Questions About Tax Filing Status
Which tax filing status should I choose?
That depends on your individual circumstances. You should choose the tax filing status that will give you the lowest amount of taxes owed.
How do I know which tax filing status to choose?
You should speak with a qualified tax professional or see IRS Publication 501 for more information.
How do I choose the right tax filing status?
You should choose the tax filing status that most closely represents your current situation. It is helpful to look at last year’s tax return to see which status you used. You may use the Interactive Tax Assistant on the IRS website to help determine which status you should choose.
How does using different tax filing statuses affect my taxes?
The different tax filing statuses allow you to claim different deductions and credits. Using the right status for your circumstance will reduce your taxable income and could result in a smaller tax bill.
Am I allowed to change my tax filing status?
Yes. You are allowed to change your tax filing status by filing an amended tax return through the IRS. You should speak with a qualified tax professional to see if it is beneficial for you.