your tax return — February 17, 2014

It Pays to be Status Conscious

by Bob Williams

choosing the right filing status

We’re not talking about keeping up with the Joneses here. No Beemer in the triple-car garage, no McMansion in the ‘burbs.

We’re talking filing status on your income tax return, and it’s very important. Whatever we select for our income tax filing status becomes the cornerstone for the return’s calculations. It could even affect whether you have to file an income tax return at all.

Granted, most taxpayers have a pretty clear idea of what their filing status should be. But for others, it’s not so apparent. If you’re wondering how that status question impacts your return, read on.

Note that your marital status on Dec. 31 is considered your marital status for the entire year. So, if you got divorced in November of 2013, the IRS considers you divorced for ALL of 2013. If more than one filing status applies to you, choose the one that results in the lowest tax.

The Gang of Five

Single – This status normally applies if you are not married, or are divorced or legally separated under state law.

Married Filing Jointly – A married couple can file one tax return together. If your spouse died in 2013, you usually can still file a joint return for that year.

Married Filing Separately – A married couple can choose to file two separate tax returns, instead of one joint return. This status could be to your benefit – if it results in less tax. Your mileage may vary. You can also use this status if you want to be responsible only for your own tax – not your spouse’s.

Head of Household – This status normally applies if you’re not married. You also must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Some taxpayers choose the Head of Household filing status by mistake, so be sure to check all the rules before using this status.

Qualifying Widow(er) with Dependent Child – If your spouse died during 2011 or 2012 and you have a dependent child, this status may apply. There are other conditions, so check out our Federal Tax Guide to see if you qualify.

Note that there are new rules for same-sex couples that now apply if you were legally married in a state or a foreign country that recognizes same-sex marriage. You and your spouse generally must use a Married filing status on your 2013 federal tax return.  This is true even if you and your spouse now live in a state or foreign country that does not recognize same-sex marriage.

Our recommendations are to choose your filing status carefully, and make sure you fit the qualifications before filing. And if more than one status applies, see if your choice will affect your tax picture.

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