Every Tax-Filing Status Explained
When preparing your annual tax return, one of the most important things to consider is your taxpayer filing status. Your filing status is commonly defined by your marital status. Typically, there are two categories — married and unmarried — and five different types of filing status and tax filing options. Keep reading to find out how choosing right filing status can lower your tax bill.
For a quick and general overview of each filing status, take a look at this tax filing status chart:
| Tax Filing Status Options | |
| Tax Filing Status | Who Can Use It |
| Single |
|
| Head of Household |
|
| Married Filing Jointly |
|
| Married Filing Separately |
|
| Qualifying Widow(er) |
|
The filing status determines your tax bracket, number of deductions and other factors that affect the amount of taxes you owe each year. The status also impacts the standard deduction — the amount by which you can adjust your gross income if you don’t itemize your deductions — that you can receive on your federal tax return. In the event you qualify for more than one filing status, the IRS recommends using the one that lets you pay the least amount of tax.
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What Is My Filing Status?
Given that your tax filing status traditionally comes down to your marital status, here is how to decide which status you are as a taxpayer for your federal return and state tax return:
1. Single
The single filing status generally applies to taxpayers who are unmarried or are legally separated from their spouse, have a separate maintenance decree or are divorced by decree on the last day of the tax year, and have no dependents.
Individuals who are divorcing and live separately from their spouse, but who had no separate maintenance decree or legal separation on Dec. 31, 2020, are ineligible for the single filing status. For example, in states that don’t recognize legal separation, divorcing couples who were living apart on Dec. 31, 2020 must use the married filing jointly or married filing separately filing status status.
Single Standard Deduction: When using the single tax-filing status, a taxpayer can claim a standard deduction of $12,400 for tax year 2020.
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2. Head of Household
The head of household filing status is reserved for single individuals who maintain a household and who the IRS considers unmarried for the duration of the tax year. In order to file as head of household, you must fulfill these criteria:
- You must pay for more than 50% of your household’s expenses.
- You must be unmarried for the entire tax year.
- You must have qualifying individuals who rely on you, such as biological children, foster children, grandchildren, siblings, parents, step-parents and in-laws, who lived with you for more than half the year.
- You must be able to claim the qualifying individuals as dependents.
Take, for example, a single, divorced father who had custody of his children from Jan. 1, 2020 to July 1, 2020, and paid all of the expenses associated with his household. Because had qualifying individuals living with him for more than half the year, and he paid more than half of the expenses for his household, the father is eligible to file as a head of household as long as he can claim the children as his dependents. If, however, he and the children’s mother agreed that she would claim the children as her dependents, neither parent would be able to file as head of household.
Head of Household Standard Deduction: Filing as the head of household, a taxpayer can claim a standard deduction of $18,650 for tax year 2020.
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3. Married Filing Jointly
When married filing jointly, you are married, and you and your spouse have agreed to file a tax return together. This status requires you to combine your incomes and deduct your combined expenses, and it might qualify you for additional deductions compared to filing separately.
If you are divorced by the last day of a given tax year, your state and federal return will require you to file as unmarried for the entire year. You might qualify as a single taxpayer or as head of household, depending on whether you meet specific criteria.
Married couples are often better off filing a joint return because it can result in deductions or credits not available to married individuals who file separately. It can also allow a couple with one unemployed spouse to contribute to two separate individual retirement accounts, potentially doubling their savings and their deductions. If the spouses file separate returns, only the employed spouse would be able to contribute to the IRA and claim the contributions.
Married Filing Jointly Standard Deduction: When filing with the married filing jointly tax-filing status, a couple can take a standard deduction of $24,800 for 2020.
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4. Married Filing Separately
In order to qualify for this taxpayer status, you must be married. In this scenario, you and your spouse have agreed to not file a joint tax return. This method is typically used if individuals find that they would pay less in tax when filing separately than when they file together.
Although married couples usually pay less tax when they file a joint return, there are some occasions when it’s better to file separately. That’s true in the case of deductions for medical expenses. You can only deduct the amount of medical expenses that exceed 7.5% of your adjusted gross income. A couple with combined earnings of $100,000 would only be able to deduct medical expenses above $7,500. However, if the spouse who incurred the medical expenses earned $50,000 of that $100,000, they could deduct expenses over $3,750 if they filed separately.
Married Filing Separately Standard Deduction: When using the married filing separately status, filers can take the standard deduction of $12,400 for tax year 2020.
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5. Qualifying Widow(er)
If your spouse died before the last day of the tax year, you can use the married filing jointly status for that year alone as long as you’re otherwise qualified to use it.
However, you might qualify for the qualifying widow(er) status for the next two years if you haven’t remarried and you have a dependent child or stepchild. In addition, you must have paid more than half of the household expenses for the tax year.
This status allows you to use the joint filing tax return rate and claim the highest standard deduction available.
Qualifying Widow/Widower Standard Deduction: Qualifying widows or widowers can take a standard deduction of $24,800 for 2020.
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How to Choose the Right Tax Filing Status
Taxpayers can qualify for more than one tax filing status on their federal tax return and state tax return, so it’s worth taking the time to explore the best filing status for you.
Look at More Than One Tax Filing Status
It’s important to review the filing statuses so you understand what your options are. Single taxpayers and qualifying widow(er)s for example, might also be eligible to file as head of household.
Choose the Status That Can Reduce Your Tax Liability
As a rule, you should choose the filing status that allows you to pay the lowest amount of tax. For instance, even if you are married, you might want to file as married filing separately if you anticipate you will receive a bigger tax refund. Or visa versa, you might be separated but choose married filing jointly in order to take advantage of more deductions.
Likewise, a single individual who is qualified to file as a head of household is likely to pay less tax by filing as head of household because the tax rate is lower. However, a qualifying widow(er) who is also qualified to file as head of household would probably pay higher tax by using that status. That’s because the tax rate for married joint filers, which is the rate qualifying widow(er)s pay, is generally lower than the tax rate for heads of household.
Click through to take a quiz to see if you are filing your taxes correctly.
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Daria Uhlig and Taylor Bell contributed to the reporting for this article.
Last updated: Feb. 22, 2021
