Knowing your filing status is important because it plays a crucial role in determining whether you need to file a return, the amount of your standard deduction, and the income breakpoints for tax brackets. Possessing the appropriate filing status ultimately defines the type of tax return form you will use when filing your 2016 federal income taxes.
Five Filing Statuses under Current Tax Law
- Single. You’re considered single if you’re unmarried, divorced, or legally separated as of the last day of your taxable year (generally December 31).
- Married filing jointly. When you’re legally married under the laws of your state, you and your spouse can elect to combine your income and file a joint return. In cases of divorce or separate maintenance decrees, the laws of your state determine whether you’re considered married. Under proposed regulations issued in 2015, same-sex marriages are recognized for federal income tax purposes when the marriage is recognized by any state.
- Married filing separately. As a married couple, you can choose to file joint or separate returns. When you file separately, you can change your mind later and amend your return to file jointly. However, you can’t switch from joint status to married filing separately after the due date of the original return. Joint returns offer benefits such as a higher standard deduction. But separating your tax liability from your spouse’s by filing separate returns can be beneficial in some situations. Just be aware that certain breaks, such as the child and dependent care credit, may not be available if you chose this filing status.
- Head of household. This is the filing status to use if you’re single and provide more than half the cost of maintaining a household for a dependent who lives with you. You may also be able to use head of household status when you’re single and maintaining a separate household for a parent — including one living in a nursing home. Head of household tax brackets are more generous than those for single filers, but less broad than the brackets for married filers who complete a joint return.
- Qualifying widow or widower. If you were widowed during the year and have not remarried, you have the option of filing jointly with your late spouse. When you’re widowed and have dependent children, you can continue to use joint tax rates for two additional years following the year your spouse died. This status lets you benefit from the favorable tax rates of joint filers and claim the highest standard deduction.
It’s important to remember that your federal income tax filing status can also affect exemptions, reportable income, deductions, credits, tax rates, and liability. In addition, some states require that you use the status reported on your federal return. That can affect the amount of state tax you pay.
If you are still unsure about which filing status you qualify for, do not hesitate to contact your Alloy Silverstein accountant. We can determine which filing status is appropriate for you and answer any questions you may have.
