Determining Tax Filing Status

An individual's tax filing status will play a significant role in how he or she completes tax return forms. Additionally, filing status may affect which credits and deductions taxpayers are eligible for and influence whether they take a standard deduction or choose to itemize. For these reasons, it's important for individuals to understand their status and know what factors or events may cause it to change during filing season. There are currently five filing statuses from which to choose from: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child.

An individual's tax filing status generally depends on his or her marital status on the last day of the year - including whether he or she is single, married, divorced, separated or widowed. Individuals who are unmarried, divorced or legally separated in accordance with state law would choose the single filing status on their tax forms.

Unmarried individuals who meet certain qualifying criteria may also file as head of household. Under this status, unmarried individuals can claim a dependent and must care for the dependent for at least half of the year. Filers must also have paid more than half the costs of maintaining the home for the year. Taxpayers who file as head of household receive a larger deduction than those who file as single taxpayers. Individuals may also benefit from lower tax rates.

Married individuals have the option to file jointly or separately. Couples who choose the married filing jointly option generally have more tax benefits than married couples who file separately. However, there are pros and cons to each filing status and individuals may want to discuss their options with a tax preparer to determine which would benefit them the most. Couples should also keep in mind that even if they have their wedding on the last day of the year, the government will consider them married for the entire tax year.

Individuals who lose their spouse may choose the married filing jointly tax status during that year, allowing them to receive the same benefits as couples who are wed. Two years following the death of a spouse, taxpayers may file under the widow/widower status if they have a dependent and meet other criteria.

Many filing statuses, such as head of household and widow(er) with dependent, have special qualifying rules that accompany them. Individuals should ensure they meet these criteria prior to completing their returns to avoid errors and processing delays. Tax preparers can help filers who qualify for more than one status determine which will give them the lowest tax rate.

By: Liberty Tax Service

Article Directory: http://www.articledashboard.com

Liberty Tax Service provides a computerized income tax preparation service and electronic tax filing. Each tax office offers customers audit assistance, a money back guarantee, and free tax return checking.