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:
- Head of Household (Unmarried)
- Single (Unmarried)
- Qualifying Widow or Widower (Unmarried)
- Married Filing Jointly
- Married Filing Separately
This 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 that you will receive on your federal tax return. Keep reading to find out how choosing right filing status can lower your tax bill.
How to Determine Your Tax 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. Head of Household (Unmarried)
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 begin filing head of household, you must fulfill at least three qualifications:
- First, you must pay for more than 50 percent of your household’s expenses.
- Second, you must be unmarried for the entire tax year.
- Third, you must have dependent children or other dependents who rely on you. Such dependents can include biological children, siblings, parents, step-parents and in-laws.
As the head of household, a taxpayer with dependents can claim a standard deduction of $9,300 each year.
Learn More: 10 Best Tax Tips for Single Parents
2. Single (Unmarried)
The single taxpayer status is reserved for individuals who were unmarried during the year and do not qualify for another taxpayer status. You are eligible for this status if you are unmarried, legally separated from your spouse, divorced or separated by decree.
3. Qualifying Widower (Unmarried)
You can use the married filing jointly status for the year if your spouse died before Dec. 31. For the next two years, you might qualify for the qualifying widow(er) status if you have a dependent child. This status allows you to use the joint tax return rate and claim the highest standard deduction available.
4. 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.
The standard deduction for married couples filing jointly doubles from $6,300 to $12,600. Please note that if you are divorced by Dec. 31, 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.
Learn More: 10 Tax Tips Every Married Couple Must Know
5. 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. Couples are encouraged to use a tax calculator to test both scenarios to determine the lowest tax liability.
You Can Qualify for More Than One 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. As a rule, you should choose the filing status that allows you to pay the lowest amount of tax.