As tax season winds down, and as you put the finishing touches on your tax return, it’s important to review the information you offer and make changes if necessary.
One of the most important items to review is your tax filing status. Your tax filing status is the classification that influences your marginal tax rate, as well as what credits and deductions you are eligible for.
There are 5 options when it comes to your tax filing status:
If you are unmarried, this is the status you choose. You pick the single filing status if you are unmarried, but you don’t qualify as a Head of Household. If you ended the year without a spouse, and there is no other filing status that describes you, you choose single.
It’s important to realize that your marriage has to be recognized by the federal government if you want to file as married. So, if you are married, or have a civil union, in your state as a same-sex couple, you must file as single (at least for now; the Supreme Court is deliberating this issue).
2. Married Filing Jointly
You are allowed to file your taxes jointly with your spouse if you are in a federally recognized marriage. This status indicates that you report everything together and that you share in the deductions and credits. Generally, there is an advantage to filing jointly, since it keeps you out of higher tax brackets for a little bit longer, and it can help you qualify for credits and deductions connected to income.
3. Married Filing Separately
Perhaps you don’t want to be considered liable for your spouse’s taxes. If this is the case, you can file separately. In order to file separately, you need to make sure that you keep good records of whose income is whose. You need to file different returns, as well as make sure that you divide up credits and deductions, since you both may not be able to claim them.
4. Head of Household
This tax filing status is designed for unmarried taxpayers who maintain a home for a Qualifying Person. Normally, a Head of Household has a lower tax rate, combined with a higher standard deduction, than a single filer. Many single parents who have their children living with them most of the time can benefit from filing as Head of Household.
5. Qualifying Widow or Widower with a Dependent Child
In order to claim this tax filing status, you need to have a dependent child that you are caring for. This tax status allows you to keep using the married filing jointly status for two years after the year of your spouse’s death.
If your spouse died during the tax year, you are still able to file jointly. Then, for the next two years, you can claim Qualifying Widow or Widower. But you do need to be caring for a dependent child, and you can’t be remarried.
If you have questions about your filing status, you can check with the IRS to make sure that you are claiming the correct status.