When you file your tax return, you're required to designate an IRS filing status: Single, Married Filing Jointly, Married Filing Separately, Head of Household or Qualifying Widow(er). This status determines which tax rates and standard deduction amounts apply to your tax return. Determining the correct filing status for your situation is essential to making sure you optimize your tax savings and avoid paying more than your fair share.
What if my status changed during the year? If you are married, divorced, or legally separated by or on the last day of the year, you can claim your new status for the whole year for tax calculation purposes. Conversely, if your spouse died and you did not remarry, you are considered married for the whole year for filing purposes.
What are my filing options? In some circumstances, you may fit into multiple filing categories, in which case you may choose the status that is most beneficial to you from a tax standpoint. Here’s what you need to know about each status to help you arrive at the right designation for your situation:
* Single. You are unmarried, divorced or legally separated, or under a divorce or separate maintenance decree. And, you don’t qualify to file as Head of Household or Widow(er).
* Married, filing jointly. You and your spouse were married during the tax year and agree to file your taxes together. In many cases this allows you to take advantage of tax breaks only allowed for couples that file jointly.
* Married, filing separately. You and your spouse decide that you want to be responsible for your own individual taxes. There are a number of reasons you may choose to file separately, including:
o Filing separately results in a lower overall tax bill than filing jointly
o You can claim an exemption for your spouse if your spouse had no gross income and was not the dependent of another person o One spouse owes taxes, and the other would get a refund
o You are separated but not yet divorced
* Head of household. You are unmarried or considered unmarried on the last day of the year and provided more than half the cost of maintaining a home for yourself and a qualifying relative. Tax rates for ‘head of household’ filers are typically more favorable than those in the ‘single’ or ‘married filing separately’ categories. In some cases, married persons who have not lived with their spouses for the last half of the tax year may qualify for this status.
* Qualifying widow/widower. If you are a widow or widower who supports a child or step-child and is not remarried you can claim Qualifying Widow(er) status for up to two years following the year your spouse dies. This designation enables you to pay the same tax rates afforded married individuals filing joint returns, which is typically more beneficial than filing as ‘head-of-household.’
Original article from H&R Block; read it here.