If you’re preparing to file your IRS taxes, you may have some questions about your tax filing status.
There are 5 filing statuses available to taxpayers:
- Married filing jointly
- Married filing separately
- Surviving spouse
- Head of household
Below, we’ll discuss each tax filing status and the related benefits and requirements….
Married Filing Jointly
This filing status is for couples who are married as of the last day of the tax year. It doesn’t matter whether you were married on January 1 or December 31, you are considered married for the whole tax year. Additionally, if you are separated from your spouse at tax time, you are still legally married until your divorce is finalized. One more caveat is that in order to utilize this filing status, both spouses must be U.S. citizens.
If a spouse passes away during the year, the surviving spouse is still considered married to the decedent spouse for that tax year (as long as he or she does not remarry). Therefore, the surviving spouse may file using this status and claim 2 personal exemptions.
Most married couples should use this filing status because it typically results in a lower tax liability. Since most married couples earn different amounts, the average of their income will result in a lower tax bracket. Additionally, the married filing jointly tax rate schedule is more beneficial than any other rate schedule.
Married Filing Separately
Married couples who choose to file separately must use this filing status and not the “single” status. As opposed to the “married filing jointly” tax rate schedule, this rate schedule is the most unfavorable, but is based off one-half of the married filing jointly status.
Additionally, this has some limitations. One example is that neither spouse may claim an earned income credit or child and dependent care credit. Typically, filing under this status will cost a few extra dollars.
So, who should complete their tax return using this filing status? First, non-resident aliens married to U.S. citizens should file under this status. Second, if a couple is in the process of a divorce or separation, this status can relieve a spouse of any penalties or liabilities from the other spouse’s tax return. Finally, couples that keep their finances separately or are in positions where they are facing a lack of trust, filing separately may be necessary.
If problems initially warranting filing separately are resolved prior to the filing deadline, an amended tax return can be submitted. However, if the issues are resolved after the filing deadline, no amended return can be filed.
This filing status was created by Congress to recognize the hardships faced after the death of a spouse. In order to file using this status, the surviving spouse must meet the requirements of a “qualified widow or widower.”
The 2 requirements are as follows:
- The surviving spouse must not have remarried
- Must have at least 1 dependent child for whom he/she pays one-half the costs of maintaining the household
If the requirements are met, then the surviving spouse may continue to use the married filing jointly tax rate schedule and standard deduction for 2 years following the year of the spouse’s death. However, the surviving spouse may not claim the personal exemption for the deceased spouse. After this 2 year period, the spouse may no longer file using the surviving spouse status, but may qualify for the head of household filing status.
Head of Household
To qualify as a head of household, a person must meet both of the following requirements:
- He or she must be single at year-end, unless he/she qualifies as an abandoned spouse (discussed later).
- He or she must pay more than half the costs of maintaining a home in which a child or other dependent relative lives for at least half of the tax year.
A few exceptions apply to the second requirement. First, the child (not the dependent relative) does not have to be a dependent of the taxpayer, unless the child is married. Second, temporary absences for school, vacation, or medical care can be included in the time spent with the taxpayer.
Finally, a dependent relative must live in the home of the taxpayer. However, an exception is made for dependent parents of the taxpayer. The dependent parents are not required to live in the taxpayer’s home.
One exception to the first requirement of being single at year-end is the abandoned spouse classification. An abandoned spouse is an individual who is married at year-end but has lived apart from his or her spouse for the entire last 6 months of the tax year and has paid more than one-half the costs of maintaining a home in which a dependent child has lived for more than half the tax year. In this situation, the taxpayer can file as head of household instead of having to file as married filing separately.
The head of household status is more beneficial than the single filing status, however it is not as favorable as the married filing jointly status.
The single filing status is for all taxpayers who do not qualify for any of the tax filing statuses discussed above.