Filing your taxes is already stressful enough without having to worry about what your relationship status is in the eyes of the IRS. However, for many Americans, this is exactly the problem they face come tax time. It is possible to get all the confusion cleared up once and for all. First, you must understand that you will qualify for one of five different filing statuses (if you need help, find an accounting services firm that can help guide you through the qualifications):
. Single
. Married Filing Jointly
. Married Filing Separately
. Head of Household (HoH)
. Qualifying Widow(er)
How Do I Know Which Status to Choose?
Filing status is based on a number of factors. Explore each option separately:
. Single — This filing status is reserved for those who were unmarried at the end of the tax year. Even if you have a girlfriend or boyfriend, you are still considered single for tax purposes. Single taxpayers with dependents may qualify for the more beneficial Head of Household filing status (see below).
. Married Filing Jointly — If you were married on the last day of the tax year (and that includes those who get hitched on New Year’s Eve), you may file a tax return with your spouse. If your spouse passed away during the tax year, you can still file a joint return for that year [see Qualifying Widow(er) for additional details].
. Married Filing Separately — Married couples have the option to each file their return if they choose to do so. Although in most cases filing a joint return is more beneficial, there may be cases where filing separate returns is more advantageous and result in an overall lower tax liability. Some couples also simply prefer to keep their finances separate. If you think this situation might apply to you, I strongly recommend talking to an accountant versed in married filing joint vs. married filing separate analyses.
. Head of Household (HoH) — This filing status is reserved for single taxpayers (again, single in the eyes of the IRS) who pay the majority of the expenses (i.e., 50% + $0.01) for a qualifying person. It is important to note that a qualifying person is not necessarily the child of the taxpayer.
. Qualifying Widow(er) — This filing status allows taxpayers with dependent children to retain the married filing joint filing status for two years following the death of their spouse.
While just a checkbox, filing status plays a crucial role in determining other aspects of your tax profile such as:
. How much income you need to make before you are required to file a return
. The amount of the standard deduction
. Eligibility for various credits and deductions
. Calculation of your tax liability
It is important that you know the rules, as this can substantially affect your bottom line.
Now that you are equipped with the knowledge to select the appropriate status for your tax return, you can go back to digging up all those receipts you meant to organize throughout the year.
If you’d like to learn more about your filing status or discuss how we can best help you as an accounting services firm, please feel free to contact InSite CPAs, LLP at for more information.
