Filing Status (federal income tax)

Filing Status is an important factor when computing taxable income under the Federal Income tax in the United States. Your federal tax filing status defines the type of tax return form an individual will use. [ [http://www.irs.gov/newsroom/article/0,,id=105098,00.html Choose Your Correct Filing Status ] ] Filing status is based on marital status and family situation. ["Id."] A taxpayer will fall into one of five possible filing status categories: single individual, married person filing jointly or surviving spouse, married person filing separately, head of household and a qualifying widow(er) with dependent children. [ [http://www.irs.gov/newsroom/article/0,,id=105098,00.html Choose Your Correct Filing Status ] ] If a taxpayer qualifies for more than one filing status, the taxpayer may choose the most advantageous status. [26 U.S.C. 1, Section 1]

Determining Your Filing Status

Generally, your marital status on the last day of the year determines your status for the entire year. [26 U.S.C. 1, Section 2]

Single:

Generally, if you are unmarried, divorced, or legally separated according to your state law on December 31st, you must file as a single person for that year because your marital status at year end applies for the entire tax year. ["Id."]

There are some exceptions, such as qualifying as a head of household or as a surviving spouse, that do not mandate that the person file as a single taxpayer. [26 U.S.C. 1, Section 1]

Married Filing Jointly:

Marital status is decided based on a person’s marital status at year end (December 31st). [26 U.S.C. 1, Section 2] If a couple is married on December 31st of the taxable year, the couple can file a joint return for the year. ["Id."] However, even if your first day of legal separation or divorce from your spouse is December 31st, you cannot file a joint return for any portion of that year. ["Id."] Certain married individuals, not legally separated or divorced, may nonetheless be considered single for purposes of filing tax returns if they are living apart. [ "Id."]

A married couple is not mandated to file jointly. Married taxpayers may elect to file separate returns. Furthermore, if you lived apart from your spouse for the last six months of the year, you may also qualify for head of household status. ["Id."] If a spouse dies during the year, the surviving spouse can generally still file a joint return with his or her deceased spouse for that year because the taxpayer’s marital status at the time of his or her spouse’s death applies to the entire taxable year. [26 U.S.C. 1, Section 1]

Married Filing Separately:

Although the joint return often produces a better result, in some cases, filing separately can be beneficial. To accommodate for such circumstances, married couples may opt to file separately for a taxable year. [Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.]

Married couples filing separately does not create an identical situation to the two parties filing as single. There are different brackets for unmarried taxpayers than for married taxpayers who file separately. Unmarried taxpayers enjoy wider tax brackets, meaning they pay less tax on the same amount of income. ["Id."] The rationale behind this differentiation may be in part due to the economy of scale married couples enjoy by sharing certain expenses. [:"Id." ]

Certain taxpayers who would otherwise be considered married, but who file separately, maintain a household for a child, and whose spouse is not a member of the household for the last six months of the taxable year shall be considered unmarried. [26 U.S.C. 1, Section 2]

Head of Household:

To qualify for the head of household filing status you must be unmarried and paid more than half the cost of a maintaining a home for yourself and another relative who lives with you for over half the year and can be claimed as your dependent. [I"d."] A “dependent” for these purpose includes grandchild and step-grandchildren, not just children and stepchildren. [26 U.S.C. 1, Section 2(b)]

Filing as a head of household can have substantial financial benefits over filing as a single status taxpayer. As a head of household, you are entitled to a more generous tax brackets and larger standard deductions. [: Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.]

Note: there are many special rules and exceptions applicable to head of household filing status. [: "Id." ]

Qualifying Widow(er) with Dependent Child:

Certain taxpayers who maintain their homes as principal residences of qualifying dependents and whose spouses died during either of the last two preceding taxable years may be considered Surviving Spouses as long as they have not remarried. [26 U.S.C. 1, Section 2] If the two year time period has run out following your spouse’s death, you may still qualify for head of household status. [26 U.S.C. 1, Section 2(b)]

Note: There are many special rules and exceptions that apply to the surviving spouse filing status. [: Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.]

Importance of Choosing the Correct Filing Status

An individual’s tax liability depends upon two variables: the individual’s filing status and his or her taxable income. [ "Id."] Filing status can be determinative of your correct amount of tax, whether you can take certain tax deductions or exemptions that could lower your final tax bill, and even whether you must file a return at all. [: "Id."] You must file your status honestly, or it will be considered fraudulent and penalties will be assessed. [ "See" 26 U.S.C. 61, Section 6013(b)(5)(B)]

ee also

*Rate schedule (federal income tax)

References

¹http://www.irs.gov/newsroom/article/0,,id=105098,00.html ²Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.

³http://www.irs.gov/newsroom/article/0,,id=105098,00.html

⁴UnitedStatesCode|26|1.

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⁸UnitedStatesCode|26|7703(a)(1).

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¹⁰UnitedStatesCode|26|7703(a)(2).

¹¹UnitedStatesCode|26|7703(b).

₁₂"Id."

₁₃UnitedStatesCode|26|1.

₁₄Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.

₁₅"Id."

₁₆"Id."

₁₇UnitedStatesCode|26|7703(b).

₁₈UnitedStatesCode|26|2(b).

₁₉"Id."

₂₀Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.

₂₁"Id."

₂₂UnitedStatesCode|26|2.

₂₃UnitedStatesCode|26|2(b).

₂₄Samuel A. Donaldson, "Federal Income Taxation Of Individuals: Cases, Problems and Materials", 2d. edition (St. Paul: Thompson-West 2007, 2d edition, 5-7.

₂₅"Id."

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₂₇ "See"UnitedStatesCode|26|Section 6013(b)(5).