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5 Tax Filing Statuses & What They Mean for You September 16, 2019

Brownfield, Terry
5 Tax Filing Statuses & What They Mean for You, Brownfield, Texas

Your filing status affects everything from your tax rate to which deductions you qualify for. While these classifications may sometimes seem straight-forward—the easiest question on an otherwise very complicated form—some life circumstances may leave you unsure what to label yourself. Choose incorrectly and it could cause problems with the IRS, potentially resulting in audits and expensive penalties. Therefore, the guide below breaks down the most common statuses and how they affect your tax liability.

What Is Your Filing Status?

1. Single

Unmarried individuals, including divorced taxpayers and those who are legally separated, should file taxes as singles. Keep in mind that your marital status on December 31st determines your filing status, so you are “single” if you divorced at any point during that year.

2. Married Filing Jointly

Most married couples benefit from filing joint returns, in which you combine your income in one form. Not only does this simplify the paperwork, but it may qualify you for larger deductions and reduce your overall tax exposure.

3. Married Filing Separately

taxesAlthough filing separate returns may result in higher overall taxes, there may be some benefits to filing separate returns. For instance, if your student loans are on an income-based repayment plan, you may want to separate your tax returns from your spouse’s to stop the monthly payments from increasing.

4. Qualified Widow or Widower

If your spouse passed away recently, filing as a qualified widow or widower lets you keep the benefits of marriage for two more years. However, this status is only available to people with children who do not remarry during the two-year window.

5. Head of Household

Unmarried taxpayers who paid more than half of another person’s expenses for the year may file as head of household, which offers more favorable tax brackets and larger deductions. Most often, the individual supported is a child or college student under 24, but may also be a parent, sibling, or anyone else for whom you provided financially.
 

Filing taxes can be confusing, which is why Terry County, TX, residents turn to Donna Sellers, CPA. For over 20 years, this dedicated accounting firm has taken the stress and uncertainty out of tax preparation, delivering a wide range of personal accounting solutions. Visit their website to see how they can help minimize your tax bill, get more financial tips on Twitter, or call (806) 637-8556 to make an appointment today.

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