How To Choose The Right Filing Status
Each taxpayer in the US has just one filing status and your filing status determines which tax deductions and rates you pay.
Your filing status is largely determined by whether you were married at the end of the year, but there are other factors that can affect it. For tax calculation purposes, people who get married during the year will be considered married for the whole year for tax calculation purposes while people who become divorced or legally separated will be considered unmarried for the whole year.
And, there are situations where married persons can be considered unmarried for tax purposes even if they are not legally divorced or separated.
Our guide looks at how you choose the correct filing status.
Single Filing Status
If you are unmarried or legally separated/divorced at the end of the year, this status is for you. However, if you have a dependent you should first check to see whether you can qualify for the ‘Head of Household’ filing status as that will offer more tax benefits.
Head of Household Filing Status
You can use this filing status if you are unmarried, can claim a dependent and have cared for a dependent for over half the year. However, not all single parents qualify for this status and so you should check carefully.
This status offers a higher standard deduction and lower tax rates than ‘single’ taxpayers.
Qualifying Widow/Widower with Dependent Child Filing Status
You can use this status if you are unmarried because your spouse died within the last two years, you have not remarried and you have cared for a dependent all year.
Qualifying Widows and Widowers receive the same standard deduction and tax rates as taxpayers who are married filing jointly. After two years, your filing status would be Single or Head of Household.
Married Filing Jointly Filing Status
You can use this status if you are married and you are filing a joint return with your spouse.
In order to file jointly, both you and your spouse must agree to file a joint tax return, and you both have to sign the return. Married Filing Jointly offers more tax benefits than filing a separate return.
Married Filing Separately
You can use this status if you are married and you and your spouse are filing separate tax returns.
Married filing separately tax payers have the least beneficial tax treatment as you do not qualify for several tax benefits and tax credits.
However, this status allows you to keep you and your spouse’s tax liabilities separate which can be of benefit in some circumstances (for example if you are separated but not yet divorced).
When you file separately, you must still cooperate and share tax information. For example, if you both have children, you must decide which of you will claim the children as dependents. While this status can offer advantages, it may be also be beneficial to consider filing jointly, or to conclude a divorce so you can file as a single person.
If I am getting married November 24, does that mean I still file as a single person as it’s so late in the year?
Wade – no. You can claim as a married person. For tax calculation purposes people who get married during the year will be treated as if they have been married for the whole year.