There is a variety of status in which you can file your taxes and the difference between them can help you determine which status you should file. At tax time, you can make the process as easy and smooth as possible with all the help you can get. What are the tax ratings? You can choose to file your taxes under one of five different classifications: single, married, separate married, householder or widow with dependent child. You can only choose one, so if you have multiple statuses that match your situation, you should choose the one with the biggest tax benefits.
Single
It may seem quite straightforward to file as a single person, but there are some situations that can affect a single status. If you were separated by the last month of the year, you are considered to be a single person for the whole tax year. If you are not married and have no dependents, you are eligible to file individually. Cancelation and divorce are situations where you would also file as one person. However, if you are single or widowed in the year, you would have to change your status to either head of household or widow.
Married Filing Joint
As with the single status, married file requirements are relatively simple. Legally married couples who live together can file as married even for a small part of the tax year. Common law couples may file as married if their union is legal in their country of residence. If you do not live with your spouse but are not legally divorced or separated, you must still file as a married person. Married couples have the option of submitting a joint tax return processing household income through a single return. This requires both spouses to sign the tax return form and date it. The joint filers share the responsibility of paying all taxes, deductions, credits and exemptions due to them. Some clauses do not require joint responsibility, such as innocent spousal relief, liability separation for those who have not lived together for the tax year or equitable relief. If a spouse can not sign the joint return, such as the deployment of the military, the primary filer can sign as a proxy for the other spouse as long as a written explanation is included.
Married Filing Separate
Tax status used by married couples who choose to record their income, exemptions and deductions on separate tax returns. In most cases, married registration offers the most tax savings, especially if spouses have different levels of income. There is, however, a potential tax advantage to filing separately if a spouse has substantial medical expenses or various itemized deductions— or if both spouses have about the same income.
Widowed
If you have been widowed in the tax year and you have not remarried, you can file for that year with your deceased spouse. For the next two years, an unmarried widow can file with qualified dependents as a widow. If you remarry that same year that your previous spouse passed away, you should file separately with your current spouse and marry the deceased spouse.
It may seem complicated to determine the status of the file, but it is a crucial step in completing income tax returns. Once you have investigated the benefits that each status can offer you, you can make an informed choice about how to file and what the requirements for each status are.
