Client Question: What is my correct filing status?

Determining your correct filing status is a critical step in the preparation of your tax return.  It is used to determine your standard deduction, eligibility for certain credits and deductions, and correct tax amount.  For example, income limitations aside, the married filing separately status is the only status for which education credits are not allowed.  Therefore, it is important to know which filing status is most advantageous to you. 

There are five filing statuses:

1)      Single

2)      Married Filing Jointly

3)      Married Filing Separately

4)      Head of Household

5)      Qualifying Widow(er) with Dependent Child

 The Internal Revenue Service (IRS) has issued some simple criteria to help you determine your correct filing status:

1)      Your marital status is determined as of the last day of the year.  For example, if you were married on December 31, 2011, your filing status would be married filing jointly on your 2011 tax return (unless of course you choose to file separately).

2)      You may be eligible for more than one filing status.  All other considerations aside, you should choose the one which gives you the lowest tax obligation. 

3)      The single filing status applies to someone who is unmarried, divorced or legally separated according to state law as of the last day of the year.

4)      If your spouse died during the year, and you remained unmarried for the entire year, you may still file a joint return with your spouse in that year.

5)      A married couple may choose to file separate returns.  If they choose to do this, both spouses must file as married filing separately.

6)      In order to file as head of household, you generally must be unmarried.  You also must have paid for more than half of the cost of maintaining a home for you and a qualified person.

7)      In order to choose Qualifying Widow(er) with Dependent Child as your filing status you must meet all of the following tests:

a)      Your spouse died in the most recent 2 year period.

b)      You were entitled to file a joint return for the year the spouse died.

c)      You did not remarry before end of the current tax filing year end.

d)      You paid more than half the cost of keeping up your home.

e)      Your home was the main home for the entire year of your dependent child or stepchild.

If you are unsure about which filing status is most beneficial for you, or would like to discuss your options further, please feel free to contact your ShindelRock tax professional.