Choosing the best tax filing status based upon your personal circumstances is a critical aspect in filing your tax return. Making the correct choice will determine how much you pay in taxes and will also determine whether you qualify for certain tax deductions or exemptions. In many cases, your tax filing status is determined by your marital status though there are certain personal situations where you may qualify for two or more tax filing statuses. The good news is that the IRS allows you file under the status that offers you the best tax advantage (i.e. the status that lowers your tax liability the most). In my experience, using a tax software package such as TurboTax will easily help you evaluate which filing status lowers your tax obligations the most.
The Five Tax Filing Statuses
- Married filing jointly
- Married filing seperately
- Head of household
- Qualifying widow or widower with a dependent child
If your marital status changed during the year, it can be confusing which filing status to use on your tax return – especially if you aren’t using TurboTax or H&R Block.
Here are a few tips to help you choose the best tax filing status for your individual situation:
- Your marital status for the entire tax year is determined by your marital status on the last day of that year. If you were married on December 31, you can file as Married Filing Jointly or Married Filing Separately.
- If you qualify for more than one tax filing status on the last day of the tax year, you’re free to choose the tax filing status that gives you the lowest tax liability. TurboTax is super at helping you determine your best filing status in most cases.
- Are you single? Single tax filing status generally applies to someone never married, divorced, or legally separated according to their state’s laws.
- Married? A married couple may file a joint return together or separately. The couple’s filing status would be Married Filing Jointly or Married Filing Separately. Generally, filing jointly is the better route. I’ll address why in a future article.
- If your spouse passed away during the year and you did not remarry during the year, you can still file a joint return with that spouse for the year of their death. This is the only exception to the “last day of the tax year” rule.
- Head of Household usually only applies to taxpayers who are unmarried. To qualify for this tax filing status, you must also have paid more than half the cost of maintaining a home for yourself and a qualifying person (such as a child or other dependent).
- You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died in the last two years and you have a dependent child who lived with you for the entire tax year. In essence, this status affords those qualifying the same filing data as Married Filing Jointly taxpayers.
There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. I’d highly advise reading this publication if you aren’t sure of your tax filing status. Otherwise, stick with TurboTax or your tax advisor.