Choosing the right filing status on your tax return

The act of choosing the correct filing status on your return is an important one.  There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. In some cases a taxpayer may qualify for more than one filing status.  As a general rule it is best to choose the status that will give you the lowest tax liability.  It is possible that by choosing a less advantageous status you may not qualify for certain credits and deductions. 

Here are some important facts to keep in mind while choosing your filing status:

• Your marital status on the last day of the year determines your marital status for the entire year.
• If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
• Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
• A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
• If your spouse died during the year and you did not remarry during 2011, usually you may still file a joint return with that spouse for the year of death.
• A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
• Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
• You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child, have not remarried and you meet certain other conditions.

The IRS considers a couple to be married if they are living together in the same residence or living apart, but not legally separated by a finalized divorce decree or separation maintenance agreement.  A taxpayer may still file a joint return if his/her spouse died during the tax year and the taxpayer did not remarry.  The IRS has ruled that one house cannot contain more than one household.  For head of household purposes, “temporary absences” for school, vacations, illness, military service, etc., do not change place of abode.  To determine cost of maintaining a household considers costs such as food consumed at home, rent paid, home mortgage interest and taxes, home insurance, repairs and utilities. Do not include costs of clothes, education, vacations, medical care, life insurance, and transportation. Cost paid by funds received from a governmental agency (such as Temporary Assistance for Needy Families, formerly known as Aid to Families with Dependent Children) do not count towards qualifying for Head of Household.

Additional information is available on the IRS website and in IRS Publication 501.  Please feel free to let me know if you have any questions.