This is just a broad brush of the IRS filing status options.Like most facets of the federal income tax law, there are many rules, exceptions and qualifiers for filing status. Tax professionals and the IRS website are the best sources for detailed information. The IRS bible on the subject is Publication 501 .
Determining the Optimum Federal Filing Status Can Save Tax Dollars
Indicating filing status on the Form 1040 just requires checking one of five boxes after the name and address block, but that check mark sets the financial framework for the tax return. It determines the taxpayer’s:
- standard deduction amount
- percentage of the tax levied on taxable income (tax rate)
- deductions and tax credits that can be claimed.
Many taxpayers meet requirements for more than one status,and should select the status that saves them the most money. There are five filing statuses (yes, that’s the correct plural):
- Married Filing Jointly (MFJ)
- Married Filing Separately (MFS)
- Head of Household (HOH)
- Qualifying Widow(er) with Dependent Child (QW)
- Single
The most advantageous statuses are MFJ and QW, followed by HOH, Single, and MFS.
What Does Married Mean for Filing Status Purposes?
Every filing status has to do with the taxpayer’s marital status. The federal tax law still defines marriage as a legal union between a man and a woman, with common law marriages being accepted if they are recognized by the states where those respective taxpayers live. Same-sex couples are not considered married for federal income tax purposes, even if their states allow same-sex marriages.
If a married couple is living apart for whatever reason, they are still considered married. If a spouse dies during the tax year, the surviving spouse is considered married for filing purposes, unless she or he remarried during that same year.
What a taxpayer’s marital status for the tax year is determined by the marital situation on December 31st. For example, if a couple got married on Dec. 31st, they are considered married for the whole tax year.
Married Filing Jointly
An MFJ return, which both spouses must sign, combines their incomes and deducts allowable expenses. A joint return can be filed even if one spouse had no income. Both can be held liable for any tax and interest or penalties due. (There are, however, ways to remedy joint liability.)
Married couples do not have to live together to file jointly. A couple going through a divorce is considered married until the divorce becomes final; a provisional decree does not change the situation.
There are circumstances where a taxpayer who has not lived with a spouse the last six months of the tax year, and who has a child, may qualify for HOH filing status as an alternative to MFJ or MFS as discussed below.
Married Filing Separately
Married couples can file MFS whether they live together or not, but filing MFS is usually penalizing. A major disadvantage is both must either itemize or claim the standard deduction. So if one spouse itemizes and the other has nothing to itemize, that spouse would not be able to claim any standard deduction, which would otherwise help reduce the tax bill.
Filing MFS usually means a higher tax rate and foregoing tax benefits such as the earned income credit (EIC) or child tax credit(s). Those taxpayers also suffer various exclusion and exemption amounts being cut, such as for alternative minimum tax and employer dependent care assistance. These are just a few of the losses; the list is long.
Sometimes however, filing MFS can be advantageous. It means that neither member is responsible for the accuracy of the other’s return or paying the other’s tax bill. Tax advantages might also be realized if one spouse has huge out-of-pocket medical expenses, casualty losses (e.g., fire or flood), or unreimbursed employee business expenses. In cases like these, the tax return should be computed both ways to determine the better option.
HOH is probably the most complicated filing status to determine, as it has a multitude of qualifiers and requirements, but it is a beneficial one. Two categories of taxpayers that can qualify for HOH: those who are unmarried and those who are married but “considered unmarried” for federal tax purposes.
Unmarried taxpayers can file HOH when they paid more than half the cost of maintaining a home for a “qualifying” individual, usually a child or other relative, who lived with them for more than half the year, not counting temporary absences. (There’s no requirement for a parent to live with the taxpayer.)
Married taxpayers are considered unmarried if they have not lived with a spouse the last six months of the tax year, have a dependent child, and they:
- file a separate tax return
- paid over half the cost of maintaining a home, which was also the main home of the child for more than half the year, excluding temporary absences such as school or vacation.
Qualifying Widow(er) with Dependent Child
For two years subsequent to the year a spouse died, a taxpayer can file QW if he or she:
- would have qualified to file MFJ the year of death
- has not remarried
- has a dependent child
- has paid over half the cost of maintaining a home
Single
Any unmarried taxpayer or one who is separated from a spouse either by divorce or a separate maintenance decree files single, unless eligible for HOH or QW.
Decedents - Filing is Required
A final income tax return must usually be filed for a deceased tax payer by a “personal representative.” There are some exceptions (e.g., military who have died in combat). Even if the deceased was not required to file, there’s good reason to if there had been any tax withholding, as it would be refunded.
Amending Filing Status
Taxpayers who feel they have been using the wrong fiing status should check into amending prior tax returns.
Barbara Jezior - My career paths include Research Psychologist, Technical Writer/Editor, Food Expert, and Professional Tax Preparer.
