The filing status you choose can have a large impact on your tax liability, either for good or bad. So it is important that you understand each of the filing statuses, as well as the advantages and disadvantages that they may present to your income tax situation.

Income Tax Filing Statuses

Which income filing status you choose will play a part in determining your tax rate, the amount of your standard deduction, and what types of other deductions and credits you can use. There are five filing statuses:

  1. Single
  2. Married Filing Jointly
  3. Married Filing Separately
  4. Head of Household
  5. Qualifying Widow(er) with Dependent Child

Single

You choose this status if you are unmarried and have no dependents. You can also file as single if you have a decree from the court stating you are divorced or separated. This must be dated before the 31st of December for you to file a single tax return that year.

Married Filing Jointly

You meet the requirements for this filing status if you are married and living with your spouse as of December 31st. You can still file as married filing jointly even if you are living apart, as long as you are not legally separated. If your spouse died during the current tax year, you can still file as married filing jointly.

Under this filing status your income, exemptions, deductions, and credits are combined with your spouses. You will also be afforded the opportunity to take advantage of the child and dependent care credit, the adoption expense credit, the American Opportunity credit, and the Lifetime Learning credit.

Choosing this status is typical the most advantageous for couples. However, there are certain circumstances that arise that may make it the less than desirable choice. For example, if one spouse owes certain debts, such as defaulted student loans and unpaid child support, the IRS may put any refund towards paying off those debts. If you filed married filing jointly in this instance, you would have to file an injured spouse claim to regain your portion of the return.

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Married Filing Separately

When you choose this filing status you report your income, deductions, and credits separately from your spouses.  This type of filing would be the most beneficial in a situation like the one related above since you would be held responsible for only your taxes and debts. The downside to filing this way is that you will lose out on certain tax credits and deductions offered to those who file jointly.

Head of Household

This filing status offers the most benefits for an unmarried taxpayer. It offers higher tax rate thresholds and a larger standard deduction. To qualify for this status you must: be unmarried as of December 31st; maintain a household for your child, dependent parent, or qualifying dependent relative; your home must be the dependents home for more than half of the year; you must pay from more than half of the household maintenance costs; and you must be a U.S. citizen or alien resident for the entire tax year.

Qualifying Widow(er) and Dependent Child

To qualify for this status your spouse must have died within the last tax year, or the tax year before last. You must also meet the filing requirements: you filed a joint tax return with your spouse the year that they died, you must not have remarried before December 31st, you must have a qualifying dependent child, and you must provide for over half of the costs of living for you and your child.

If you qualify for this credit you will get to use joint tax rates and the highest standard deduction.

Overview of Income Tax Filing Status

As you can see from this article, choosing the correct income tax filing status is very important. A qualified tax professional can help you to make the correct decision.

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