How to Choose the Right Filing Status?

Choosing the wrong status can make you pay more taxes than you should, so knowing your options is important. The filing status you choose when you file your tax return determines several important things about your taxable income, including the amount of your standard deduction, the rate at which your taxable income is taxed, and your eligibility for a number of tax credits. It also has a role in your refund amount, so it’s worth picking the best one for your situation. 

Tips to Help You Choose the Right Filing Status

• You can file jointly with your spouse or separately if you’re married. Filing jointly can offer certain tax benefits, such as a higher standard deduction and lower tax rates. However, if you and your spouse have significantly different incomes or one spouse has many deductions or credits, it may be beneficial to file separately.
• If you have dependents, you can file as head of household or as a qualifying widow(er) with a dependent child. These filing statuses can offer a higher standard deduction and lower tax rates than filing as a single.
• Some tax deductions and credits are only available to certain filing statuses. For example, the earned income tax credit is only available to those filing jointly as single, head of household, or married (if both spouses have earned income). Review the eligibility requirements for deductions and credits to determine which filing status will give you the most tax benefits.
• In addition to federal taxes, you’ll need to consider state tax laws when choosing a filing status. Some states have different filing requirements and tax rates for different filing statuses.
• If you’re unsure about which filing status to choose, consider using tax software or consulting with a tax professional. They can help you determine which filing status will give you the most tax benefits and ensure you file your taxes correctly.

Filing Statuses

There are five different filing statuses that you can use to file your taxes:

Single: This filing status is for individuals who are not married and do not qualify for any other filing status. You can claim this status if you were unmarried or legally separated on the last day of the tax year and do not qualify for any other filing status.

Married filing jointly: This filing status is for married couples who want to file their taxes together. You can claim this status if you are legally married and both spouses agree to file a joint tax return. You must report all of your income, deductions, and credits on the same tax return.

Married filing separately: This filing status is for married couples who want to file their taxes separately. You can claim this status if you are legally married and do not want to file a joint tax return with your spouse. Each spouse must report their income, deductions, and credits on their tax return.

Head of household: This filing status is for individuals who are unmarried and provide a home for a qualifying dependent. You can claim this status if you are unmarried or considered unmarried on the last day of the tax year, you paid more than half the cost of keeping up a home for the year, and a qualifying person lived with you in the home for more than half the year.

Qualifying widow(er) with dependent child: This filing status is for individuals who are widowed and have a dependent child. You can claim this status if your spouse died in one of the two tax years preceding the current tax year, you have a dependent child who lived with you all year, you paid more than half the cost of keeping up a home for the year, and you have not remarried.