Taxes can be complicated matters, and we have gotten overwhelmed when trying to file our annual federal and state tax forms. One of the most common questions when helping individuals and businesses with taxes is the misunderstanding of filing statuses. So, we thought we’d take some time and break it down for you.
There are five main individual tax filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying surviving spouse. Generally speaking, your filing status is determined by “your marital status on the last day of the tax year for which you are filing.” This article explores the 3 most common filing statuses: single, married filing jointly, and married filing separately.
Filing as a Single Taxpayer
Let’s start with a single filing status. This is the simplest to understand in terms of qualifications. The IRS defines single as ”on the last day of the year, you are unmarried or legally separated from your spouse under advice or separate maintenance decrees and you do not qualify for another filing status.” Your filing status must match both your federal and state income tax.
This status generally applies to individuals who are:
unmarried
divorced
legally separated under a divorce or separate maintenance decree governed by state law (check your state laws)|
Under the single status, the IRS requires an individual to file a federal tax return in 2023 if federal gross income exceeds $12,750.
If you qualify to file under another status, it is to your benefit to do so, as single filers have the lowest tax thresholds and highest tax rates as individuals.
What Qualifies an Individual as Married?
Per the IRS, a person is considered married for the entire year under the following conditions, if on the last day of the year for which you are filing taxes, you and your spouse:
are married and living together
are living together in a common law marriage which is recognized in your current state or in the state where the common law marriage began
are married and living apart but are not legally separated under a decree of divorce or separate maintenance
are separated under a non-final decree of separation or divorce
if your spouse passed away during the year, you are considered married for the whole year for which you are filing.
Once you have determined you qualify to file as married under the IRS, you can either file as married filing a joint return or married filing separately. We will look at both, beginning with married filing jointly.
Married & Filing a Joint Tax Return
To file a joint return, you and your spouse must agree to do so. Under a joint return, both you and your spouse report your combined income and earnings and deduct your combined allowable expenses for the year.
It is generally in your best interest to file a joint return because:
your tax rate may be lower than filing separately
your standard deduction may be higher
you may have access to additional tax benefits unavailable through other filing statuses
While filing a joint return does have the above benefits, it also carries with it some additional requirements and risks.
Here are some items to be aware of when filing a joint return:
you and your spouse must include all your income and eligible deductions on the return
you and your spouse must file jointly for the same tax period
you and your spouse may use different accounting methods to file your joint return
both you and your spouse are held accountable (individually and jointly) for the joint return, including any tax, interest, or penalty due
If you are concerned about filing a joint tax return with your spouse for any reason, you should consult a certified tax professional about filing a separate return and any other options.
Married Filing Separately
If you are married but wish to file separately, you may do so according to the IRS tax code.
You qualify as married filing separately if:
you only want to be responsible for your own taxes
you will pay less tax than filing jointly
you and your spouse do not agree to file a joint return
If you choose to file as married filing separately, you only report your income and your deductions. Your spouse will claim their own income and deductions on their return.
Be aware there are special rules for using the married filing separately, including decreased eligibility for certain tax benefits and higher combined tax rates. You must also include the name and social security number of your spouse on each separate return filed.
Unique Situations to Consider when Determining Your Tax Filing Status
It is always to your advantage to consult a certified tax professional if you have questions about your unique situation. They are available to guide you through your options, determine the correct filing status, and give you customized, one-on-one support for your circumstances.
Here are some situations in which it would be prudent to consult a professional before proceeding with filing your annual tax returns:
you and your spouse do not agree on how to file
you and your spouse got married during the calendar year for which you are filing.
you separated from your spouse during the calendar year for which you are filing.
your spouse passed away during the year
you have questions about any of the qualifications for your filing status
you are filing your first tax return
Additional Resources for Further Reading
https://www.nerdwallet.com/article/taxes/how-to-choose-tax-filing-status https://www.forbes.com/advisor/taxes/what-is-my-filing-status/
תגובות