How to Choose A Filing Status

January 21, 2015 : Kevin Martin

Ed note: Have you ever questioned whether you are using the correct tax filing status on your return? It seems like a simple thing to choose, but it’s a big one in the long run. Kevin Martin from The Tax Institute has some helpful information for you. 

Your tax filing status is one of the most important decisions you’ll make in filing your return. It determines your standard deduction, as well as other deductions and credits. So it is not to be taken lightly.

In some cases, the filing status you need to use is crystal clear. In other cases, it’s a bit tricky. Here are a few questions – and additional resources – to help you narrow down which status might be the most advantageous for you.

Are you married?

Really, this question is: are you married or considered married or unmarried or considered unmarried on the last day of the year?

That’s a lot of “or”. Here’s the deal. If you are married and living together, then you’re married! (I hope that’s not a surprise.)

You are also married for tax purposes if:

  • If you are living together in a common law marriage that is recognized by the state you live in, or by the state the common law marriage began.
  • If you’re married, living apart but not legally separated.
  • If you are separated under an interlocutory (not final) decree of divorce.

If you meet any of those criteria, you can choose to file as married filing jointly or married filing separately

UNLESS you accepted a premium tax credit under the Affordable Care Act. If that’s the case, you need to file as married filing jointly in order to receive the credit.

Should you file jointly or separately?

That’s up to you. Couples typically find that it is most advantageous to file jointly. However, there are many good reasons to file separately, as well. You should speak with a tax professional if you think some of those reasons might apply to you.

So there’s the flip side of the coin: unmarried. If you are not currently, nor have you ever been married, then it’s easy to say you are unmarried.

If on the last day of the year you are legally separated from your spouse under a final divorce or separate maintenance decree or if you have a court decree of annulment, then you are considered unmarried for tax purposes. If you obtained an annulment and filed as married in prior years, then you will need to amend those earlier returns.

If you are unmarried

There are two filing statuses in this category – Single and Head of Household. So there are a few more questions to ask.

Do you have kids?

If the answer is no, your filing status is likely Single. UNLESS…

Did you maintain a household for a qualifying child or a qualifying relative?

If the answer is yes, your filing status is likely Head of Household. Be careful though. Head of Household can be a tricky one. First, you need to have paid more than half the cost of maintaining a household for the year – and you can’t include just anything in that calculation. It specifically looks at rent, mortgage interest, real estate taxes, home insurance, property taxes, repairs, utilities and food eaten in the home. Then, you must have had a qualifying child or relative who lived with you for more than half the year and you can claim as a dependent.

Read all about Head of Household status and who can be a qualifying relative.

Filing as Head of Household affords you a larger standard deduction and reduces your taxable income.

The fifth filing status

If your spouse died in 2014, and you did not remarry, you must use married filing jointly or married filing separately on your tax return; you are considered married for the entire year. For up to two years following the death of your spouse, if you do not remarry and have a dependent child, you may use the Qualifying Widow(er) filing status. This allows you to use the married filing jointly tax brackets.

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Kevin Martin

Kevin Martin

The Tax Institute, H&R Block

Kevin Martin, JD, LLM, is a lead tax research analyst at The Tax Institute. Kevin leads research teams focused on estate, trust, gift, retirement, IRS procedures and state and local tax issues.