Determine Your Tax Filing Status

In the United States, your tax filing status can impact the tax benefits you receive. For this reason, you should choose the correct filing status. Sometimes, you might have several to pick from, and you can choose whichever status yields the greatest tax advantages. If you need help choosing a filing status, consult with a qualified tax professional.

Steps

Choosing the Right Tax Status

  1. Choose single if you are unmarried. Generally, you can file as single if you meet any of the following requirements:[1]
    • You’ve never been married.
    • You’ve been legally separated according to your state law, e.g., by getting divorced. However, your divorce must be final by the end of the tax year.
    • You were widowed before the start of the tax year and haven’t remarried before the end of the year.
  2. Identify your options if you are married. If you are married on the last day of the tax year, then you will file as married. However, married couples have two options:[2]
    • Married filing jointly. You’ll file a joint tax return with your spouse. You can file jointly even if you haven’t lived with your spouse by the end of the year, or if your spouse has died during the tax year and you didn’t marry.
    • Married filing separately. In some situations, it might make sense for married couples to file separately. You will each file a separate tax return and report only your own income, deductions, credits, and exemptions. Generally, you pay only the tax on your own income.
  3. Check if you qualify as a head of household. This filing status is reserved for unmarried individuals who provide a home for someone. The rules are quite complicated, and you should read your tax form instructions closely to see if you qualify. Generally, you must meet the following:[3]
    • You must be unmarried. You will satisfy this requirement in the following situations:
      • You were legally separated according to your state law. However, the divorce must be final by the end of the year.
      • You can be married but live apart from your spouse for the last 6 months of the year.
      • You are married to a nonresident alien during the year and don’t want to treat them as a resident alien.
    • You paid over half the costs of keeping up your home or your dependent parent’s home.
    • You have a qualifying person living with you for more than half the year, except for temporary absences.
      • Generally, a child, stepchild, foster child, or sibling qualifies if they are under 19.
      • Other people may also qualify, if they have a very-low income and you provided support.
      • Note that a dependent parent doesn’t need to live with you.
  4. Analyze if you qualify as a widow(er) with a dependent child. This filing status is reserved for people who lost a spouse. Your spouse must have died in the 2 years before the current tax year. For example, for 2017 taxes, your spouse must have died in 2015 or 2016. You can’t have remarried before the end of the tax year.[4]
    • You must have a child or stepchild you can claim as a dependent on your tax return. A foster child doesn’t count.
    • Generally, the child must have lived in your home for the entire year.
    • You must have paid over half the costs of maintaining your home.
    • You must have been able to file a joint return with your spouse the year they died, even if you chose not to.

Deciding How to File When Married

  1. Check your tax brackets. Generally, over 90% of all married couples will save more by filing jointly. However, in some situations, you might save taxes by filing separately. For example, if 1 spouse makes a lot more than the other, then you might want to file separately.
    • For example, a married couple makes $200,000 jointly. However, 1 spouse makes only $40,000 while the other spouse makes $160,000. The spouse who makes $40,000 will pay less in taxes by filing separately than if their income was lumped in with their spouse’s.
    • Use an online tax calculator to check how much you will pay if you file separately or jointly. You can also look at Publication 505, Tax Withholding and Estimated Tax.
  2. Identify the size of your deductions. If one spouse has very large deductions, then you might want to file separately. For example, you can deduct medical expenses if they are more than 10% of your adjusted gross income. If you file jointly, then you might not qualify.
    • For example, one spouse has $5,000 in medical bills. His adjusted gross income is $40,000 a year. If he files separately, then his medical bills are more than 10% of his adjusted gross income, so he can claim this deduction.
    • However, his spouse might make an additional $40,000. In that case, the $5,000 in medical bills is not more than 10% of the couple’s adjusted gross income, so they can’t claim the deduction.
  3. Analyze whether you qualify for certain credits or deductions. Some credits and deductions are reserved for couples filing jointly. If you file separately, you won’t qualify. For example, you can only claim the following if you file jointly:[5]
    • Earned income credit
    • Standard tax deduction for student loan interest
    • Credit for child and dependent care expenses
    • Education tax credits
    • Adoption tax credit
    • Others, which you should discuss with a tax professional
  4. File separately if 1 spouse has tax arrears. The government can seize your tax refund if you owe unpaid taxes (or unpaid child support). In this situation, you should file separately so only the spouse with the arrearages will have their tax refund seized.
  5. Analyze your unearned income. You might need to pay taxes on passive income: rental income, dividends, or interest. If you make more than $250,000 jointly, you’ll pay an additional 3.8% in taxes. However, if you file separately, you don’t pay this tax until you make more than $125,000.
    • For example, Jason and Kevin are married. Jason makes $95,000 and Kevin makes $145,000. Jason’s income is entirely passive, but he isn’t hit with the 3.8% tax if he files separately because he makes less than $125,000.
    • However, if he files jointly with his husband, then the tax does apply to his income.
  6. Look closely at dividends and capital gains. Your capital gains tax rate will go up from 15% to 20% once you make about $450,000 in joint income. Depending on your situation, you might be better off filing separately.
    • For example, a couple might have $500,000 in joint income. One spouse makes $350,000 and the other makes $150,000, mostly from capital gains. If they file jointly, then they must pay the higher tax rate. However, by filing separately, they will pay less.

Getting Tax Advice

  1. Use the online IRS assistant. The IRS has an Interactive Tax Assistant available at https://www.irs.gov/uac/what-is-my-filing-status. Click on the “Begin” hyperlink and answer the questions. It takes about five minutes to complete.
  2. Find free tax help. When tax season rolls around, there are plenty of people available to help you for free. You can explain your situation and ask them what filing status you should pick.
    • The Volunteer Income Tax Assistance (VITA) program provides free tax help to people who make $54,00 or less or who are disabled.[6] You can find your nearest VITA program by using the locator tool at https://irs.treasury.gov/freetaxprep/. You can also call 800-906-9887.
    • Taxpayers who are over 60 can use the Tax Counseling for the Elderly (TCE) program. Find your nearest program by calling 888-227-7669.
  3. Meet with a qualified tax professional. If you don’t qualify for free tax help, you should consider hiring someone to look at your income and determine which tax filing status is most to your advantage. You can find a tax professional in the following ways:
    • Ask friends or family. They might be able to recommend a tax professional they have used.
    • Contact your state’s society of accountants. They should be able to give you a referral.
    • Look in your phone book. There are plenty of tax professionals listed.

Related Articles

References

  1. ↑ https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
  2. ↑ https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
  3. ↑ https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
  4. ↑ https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
  5. ↑ https://www.efile.com/married-filing-separately-tax-filing-status/
  6. ↑ https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-volunteers
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