An Elaborative Guide to Tax Filing Status

Published - 26 November 2021, Friday
  • US Tax

Taxpayer filers must know their tax filing status in order for the process to run smoothly. Remember that taxpayers' status can change at any time during the year. When one understands the different filing statuses, one can detect which is the best. Moreover, with awareness of tax filing status, various elements can be determined, elaborated more below.

Importance of Knowing Your Tax Filing Status

Whatever your tax filing status is can have a tremendous amount of impact on the credits, the types, the number of deductions and the exemptions that will be allowed for you to claim. Various elements can also be determined by being aware of tax filing status. This includes clarity in the following regions:

  • How much tax is an individual supposed to pay?
  • Whether the taxpayer is eligible for certain credits or not?
  • Is it mandatory for a taxpayer to file a federal tax return? Are they supposed to receive a refund?
  • The details regarding the standard deduction amount.

An individual’s tax filing status determines whether or not they are eligible to claim these benefits. Remember that whatever level you are at as of December 31st will be your status for the rest of the year.

For expert filing of Federal Tax Return contact Expat Tax Online

Tax Filing Statuses

Upon completing a tax return, individuals must select a filing status based on their current situation. The statuses are as follows:

  • Single
  • Married Filing Jointly
  • Married Filing Separately
  • Head of Household
  • Qualifying Widow(er) with a Dependent Child
  1. Single

If you are not legally married, you will be considered single by the IRS. The presence of any significant other in your life does not affect the IRS. What’s more, individuals who have been divorced or are legally separated or have registered domestic partners are all termed as legally single by the state. Ensure that you conduct a proper understanding of your state’s specific laws for filing.

  1. Married Filing Jointly

For married individuals, filing taxes is slightly different, and hence another status is crucial to be noted. Those who are married can opt for filing their taxes jointly. This is a favorable option for married couples since it reduces the amount that both individuals own. Furthermore, additional perks, including earned income credit and education credits, are not available for a married couple who file their taxes separately.

  1. Married Filing Separately

As mentioned, while you should file your taxes jointly, separate filing is also available. This option is usually opted for when the two people in marriage live apart for a long duration. Another reason for filing separately is if one individual in a couple has a different set of expenses and would receive a bigger refund if they opt for filing separately.

  1. Head of Household

For the status of Head of Household, there are specific requirements to keep in mind. If you wish to file as the Head of Household, you need to pay more than half the cost of maintaining a home for a dependent, have at least one qualifying dependent, and be unmarried. The dependent can be anyone under 19, including nieces, nephews, stepchildren and grandchildren, etc. The perks for filing as head of household include favourable tax brackets and a larger standard deduction.

  1. Qualifying Widow (Er) With Dependent Child

This category may pertain to a person if their partner died in one of the preceding two years and currently has one dependent kid. Other requirements also apply.

Well, over one file status may be applicable, and taxpayers can usually select the filing status the enables them to pay the lowest level of tax.

Contact ExpatUsTax for expert advice regarding How to file your own taxes

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