If you’ve ever stared at the IRS tax brackets trying to figure out where you fit in, you’ll notice that your filing status has a huge impact on your federal income tax. Your filing status not only determines which tax forms you fill out, but also your eligibility for certain tax credits, which tax credits you can take and other tax breaks.
Let’s take a closer look at the five filing statuses and how they affect your tax liability.
Your filing status is a set of household characteristics that determine the rate at which your adjusted gross income (AGI) is taxed. This is influenced by the following factors:
Choosing the right filing status is critical because it affects your standard deduction amount, the child tax credit or earned income credit you’re eligible for, and many other tax credits that could significantly reduce your taxable income and ultimately the amount of tax you pay.
Read more: What is taxable income?
According to federal tax filing requirements, you must select a filing status for your tax return. Taxpayers choose from five categories, although it’s worth noting that you don’t have to meet the filing status requirements for the entire tax year.
In some cases, your status (marital or otherwise) may fall into the “it’s complicated” category. For these situations, your filing status depends on your marital status on the last day of the tax or calendar year.
If any of the following describes your situation, you probably qualify for single status with the IRS.
As long as you are not legally married until the last day of the year, the Tax Administration considers you an unmarried taxpayer for the entire year for tax preparation purposes.
If your divorce is finalized or you have a separate maintenance order and you are considered legally divorced by December 31st, you are single.
There are several other scenarios that could qualify you for single status, such as being in the registered domestic partnership or being a widower. The basic rule for tax purposes is that if you are not married and do not qualify for any other filing status such as head of household or qualifying widow, then you are single according to Uncle Sam.
If you are married and file taxes together, or if your spouse died during the tax year, this filing status is probably the best fit for your situation. However, filing married status jointly has some provisions.
Even if you are in the process of divorcing, as long as you are still legally married at the end of the year, you can file jointly.
You and your spouse must file jointly under this filing status, which means combining gross income, unearned income, and filing jointly through finances.
If your spouse died at any time during the tax year for which you are filing, the IRS considers you married for the entire tax year.
When it comes to power, marriage has its advantages. Married couples filing jointly often earn a higher standard deduction and other tax credits that ultimately give them a lower tax liability.
Read more: Tax credit vs. tax deduction: What’s the difference and which is better?
Married couples can still choose to file separate returns, though they’ll have to get on the same page about whether to take the standard deduction or itemize. There are several advantages to filing separately, including the following:
This sounds obvious, but some couples have good reasons to separate their financial lives, especially if they have drastically different financial situations. A separate return can mean a smaller tax refund, but more peace of mind.
For couples with high combined incomes, filing separately may allow certain deductions for medical expenses that they would not otherwise be eligible for.
Note that if you live in a commonwealth state, this negates the majority tax benefits for couples to file separately. Filing married separately has other significant disadvantages, including the loss of student loan interest deductions and other tax benefits.
Filing separately can also reduce your standard deduction, child tax credit and retirement savings deduction.
Read more: Standard vs. Itemized Deduction: How to decide which tax filing approach is right
According to the tax administrationincorrect indication of the status of the application is one of the most common mistakes made by taxpayers when filing their taxes. Head of household application status can be particularly tricky as it covers a narrow set of circumstances:
The IRS has very specific rules about what defines a head of household. You must be a single or unmarried taxpayer who bears half of the maintenance and other household expenses of an eligible person such as a dependent child.
Dependent children must generally be under 19 (24 if students) and live with you for most of the tax year. The exception to this rule is if the eligible person is a dependent parent.
The benefit of filing for head of household status is that not only do you get a lower tax rate and higher standard deduction, but you can also claim certain deductions for your home such as property taxes and mortgage interest.
If your spouse died during the tax year, you can (and should) use married filing jointly. However, after that first tax year has passed, surviving spouses can continue to claim some tax relief. Consider qualifying widow or widower status if you meet these requirements.
During the year in which the spouse dies, the surviving person can use the status of joint marriage registration. For the next two tax years after that, taxpayers can use qualifying widow or widower status.
This filing status is only available to widowers or widowers still living with dependent children, although temporary absences, such as military service, are allowed.
To claim this filing status, you will need to remain unmarried for the eligible tax years following your spouse’s death.
The advantage of qualifying widow or widower status is that it taxes the surviving spouse as if they were married filing jointly several years after death, reducing tax liability and allowing better financial stability for survivors.
Read more: Free tax return: 7 ways to pay your taxes for 2024
To choose the correct income tax filing status, start by determining your marital status at the end of the year.
If you are legally married…
Choosing your filing status depends on your income and potential deductions, but most couples will benefit from listing their married status on their tax returns.
If you are not married but are supporting a dependent…
Whether you are a divorced or single parent or a surviving spouse, you may qualify for head of household status or widow or widower tax benefits.
If you are single or single…
At the end of the tax year, if you’re not married and can’t claim dependents, you’ll probably have to file as a single taxpayer.
You can change your tax return at any time, including changing your return status. Note that this may change your tax liability and may result in a higher tax bill or refund. However, the Tax Administration sets a limit on allowing taxpayers to use it Form 1040X go back a maximum of three tax years to make adjustments.
Your household filing status usually corresponds to your marital status at the end of the tax year, combined with other factors such as whether you have dependent family members. Still not sure if you’re selecting the correct filing status for your federal tax return? You can use IRS Filing Status Tool to confirm your filing status or consult a tax professional.
