While most of us look forward to spring and the season of renewal, there is one thing many don’t look forward to and that’s taxes.
It’s that time of year when you need to crunch numbers, hunt for old receipts and for some, call your accountant. With taxes being so much in the news lately, you might be wondering about how to file.
Additionally, you might ask whether you are eligible for certain tax deductions and credits that are based on income.
Of course, your tax filing status depends on your marriage situation, and whether you have dependents to support. Your tax filing status is also based on your situation on the last day of the year, as well as what you have done to support others for at least six months of the year.
Here is are 5 different tax filing statuses to consider and suggested by web site Moneysmartlife.com
If you are not married on the last day of a given year, or if you can be considered unmarried because of a legal separation, you should file single. However, if you are claiming a dependent, and you have provided support for more than six months of the year, you could qualify to file as head of household, a status that comes with more tax benefits than filing as a single person.
Keep in mind for federal tax purposes, same-sex marriages are not recognized, even if you are legally married in the state you reside. Bottom-line: You are considered single by the IRS.
Married, Filing Jointly
For many couples, this is a common filing status. If you are married, you can file a joint tax return, and this can provide you with a host of tax benefits. With a joint tax return, you combine all your income together, as well as deductions and credit.
You accept full responsibility for the return when signing it, which means that if your spouse has been committing fraud, you could also be held responsible. There are examples where you receive dispensation for your spouse’s indiscretions, but, typically, a joint return means you are like one individual.
Married, Filing Separately
If you are married, you can choose to file separate returns. You each report your own income, and you need to coordinate your tax returns. You either both must claim the standard deduction, or you both must itemize. Additionally, there are numerous deductions and credits that you are completely ineligible for if you file separately.
If you are a same-sex couple, you can’t use this filing status. Even though it might be tempting, since you are still filing separate returns, you can’t file as ‘married.’
The main advantage to married, and filing separately is that you can keep your tax liability separate from your spouse’s. This can be important if you think that your spouse has been committing tax fraud, or if you are worried about being responsible for your spouse’s tax situation.
Head of Household
The head of household filing status provides you with a better tax benefit than filing as a single, and recognizes your contributions to caring for a dependent. To file as a head of household, you need to be unmarried (or considered unmarried due to legal separation) on the last day of the year, pay more than half the cost of keeping up a home for an entire year, and a qualified dependent must have lived with you for more than six months (except in the situation of a parent, but you must provide the support).
Widow or Widower with Dependent Child
If you used to be eligible to file a joint return, but your spouse died, take advantage of this filing status. Your spouse must have died during one of the two preceding tax years, and you have not remarried during the tax year. Also, you do need to maintain a home for a qualifying dependent child.
In the end, do think about your own personal situation, and opt for the tax filing status that makes the most sense for your situation.
for your situation.