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It important to note that the tax filing status tells the internal revenue service what credits, deduction and exemptions is expected to be available to you on your tax return. Using the right filing status when filling your income tax return is very important as can have an impact on the tax benefits you receive.
It important to note that the tax filing status tells the internal revenue service what credits, deduction and exemptions is expected to be available to you on your tax return. Using the right filing status when filling your income tax return is very important as can have an impact on the tax benefits you receive.
There are 5 filing status categories that are recognized by the Internal Revenue Service and must be reported on your tax return. It is important to review and understand these categories as they may impact on your tax return.
Single:An individual will have the option of filing as single if he or she is legally separated, divorced, widowed or unmarried as of the last day of a calendar year which is December 31st. Also, tax payers who have dependents but are not were not the primary caregivers for at least half of the year are also required to use this tax filing status. It is important to note that for individuals who do not meet the criteria for other filing categories are advised to file as “Single”.
Married Filing Jointly: Couples who are married and file under the “Married Filing Jointly” status must jointly take responsibility for income reported and taxes owed with a combined tax return. In order to file with this status, a couple must be legally married as of the last day of the tax year in question. A widow or widower whose spouse has died and is not remarried may also use this status. It is important to note that most couples file using this status because of the perceived benefit of lower tax liability as against filling separately.
Married Filing Separately:A married individual can choose this filing status especially when he or she wants the responsibility for their own tax or in cases where it will result to less tax than filing a joint return. You will have to use this status if you and your spouse do not agree on filing a joint return unless you are qualified to file as head of household. It is however advisable that couples should compute their taxes on both status and choose which one offers the best deal for them both.
Head of Household: Filing as a “Head of Household” is applicable to individuals if he or she is unmarried as at the last day of the year. However, to qualify for this, it is expected that the taxpayer must be paying for over half the cost of maintaining his or her home and must have a qualifying dependent which must have lived with them for a period of at least 6 months. This category of filing status is normally used by single parents who have custody of their children.
Qualifying Widow/Widower with Dependent Child: This category of filing status can be used by a widow or widower who has not remarried and lives with a dependent child. It can apply for a year and can also be used for up to a period of 2 years after their spouse has passed away. However, it is important to note that a qualifying widow or widower must have been entitled to file a joint return with their spouse in the year that the passed on even if it was not actually filed. Note that this category of tax filing status entitles the individual to use joint tax rates and the highest standard deductions.
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