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How to determine your tax filing status

By Louis DeNicola

While determining your tax filing status can be confusing, it's important to get it right.

Not only are you responsible for only using a status that you’re eligible for, but many parts of your tax return depend on the tax filing status you use, including when you need to file a return, your standard deduction, your tax rate and your eligibility for other deductions and tax credits. These in turn can affect how much you’ll owe, or receive, when you file your tax return. 

Here’s what this article will cover:

1. How your tax filing status may impact how much tax you pay
2. How to choose your tax filing status
3. The five main federal tax filing statuses
4. What to do about your state tax return

 

How could your tax filing status impact your tax burden?

Here are a few examples of how your tax filing status could affect your tax liability for the year. First, your marginal tax rate depends on your income and filing status.

Taxable income brackets for the 2016 tax year (the return you file in 2017)

Marginal tax rate Single filers Married filing jointly or qualifying widow(er) Married filing separately Head of household
10% Up to $9,275 Up to $18,550 Up to $9,275 Up to $13,250
15% $9,276 to $37,650 $18,551 to $75,300 $9,276 to $37,650 $13,251 to $50,400
25% $37,651 to $91,150 $75,301 to $151,900 $37,651 to $75,950 $50,401 to $130,150
28% $91,151 to $190,150 $151,901 to $231,450 $75,951 to $115,725 $130,151 to $210,800
33% $190,151 to $413,350 $231,451 to $413,350 $115,726 to $206,675 $210,801 to $413,350
35% $413,351 to $415,050 $413,351 to $466,950 $206,676 to $233,475 $413,351 to $441,000
39.6% $415,051+ $466,951+ $233,476+ $441,001+

Your standard deduction, an amount you can take out of your taxable income if you don’t itemize deductions, also depends on your tax filing status.

Standard deduction for the 2016 tax year

Filing status Deduction amount
Single $6,300
Married filing jointly $12,600
Married filing separately $6,300
Head of household $9,300
Qualifying widow(er) with dependent child $12,600

There are also additional standard deduction amounts that apply for the elderly or blind.

Considering the potential impact on your tax return, it's important to choose the best (and correct) tax filing status for your situation.

If you're unsure which status may be best, you could use tax-preparation software to see how different statuses affect your return or hire a tax professional.

 

Picking your tax filing status

Generally, your filing status will depend on whether you're married.

One tricky point: For tax-filing purposes, your marital situation at the end of the year is what counts for the entire year.

"If you were married all year and your divorce was finalized on New Year's Eve, you'd file as 'Single' (or 'Head of household,' if you qualify)," says Abby Eisenkraft, an enrolled agent with Choice Tax Solutions in New York City.

Similarly, she adds, "If you got married on New Year's Eve, you'd file as 'Married filing jointly' (or 'Married filing separately') for the year."

You're also considered married for tax purposes if your spouse died before the end of the year, though the filing status you end up using (for you and/or your deceased spouse) can depend on factors such as whether you are remarried within the same year.

 

The five federal tax filing statuses

There are five different tax filing statuses. If you qualify for more than one, you can choose the status that's most beneficial to you.

Single. Single is the default status if you are unmarried and don't qualify for another filing status. You may fall under the single filing status if you don't have any dependents and you're unmarried or legally separated from your spouse, either through a divorce or separate maintenance decree.

Married filing jointly. If you're married, you can generally choose whether you want to file jointly or separately from your spouse. Both spouses could file jointly even if one of you didn't have any income during the year. With a joint tax return, you'll report your combined income, deductions and credits, and taxes due or to be refunded on a single return.

Married filing separately. Eisenkraft considers "Married filing separately” to be “the least beneficial status." When you choose "Married filing separately," you might not qualify for certain deductions or credits, including the Earned Income Tax Credit and Child and Dependent Care Credit.

However, there are still many instances when it could be the right financial choice. For example, you might be able to utilize lower tax brackets or increase your benefits from certain deductions, such as medical expenses, that are limited based on your adjusted gross income (AGI). There can also be other aspects unique to your personal situation to consider, such as your investment planning, whether you and your spouse want to share or split the responsibility for your taxes, or community property implications in certain states.

Head of household. Compared to "Single" and "Married filing separately," "Head of household" offers a lower tax rate and higher standard deduction for the same level of taxable income.

This status can be one of the most confusing, though.

You might think you could use it simply because you take care of yourself and your home, but there’s more to it. You must be unmarried or considered unmarried for tax purposes and have paid more than half of your home's expenses during the year. You also generally must have had a qualifying person who lived with you more than half of the year. A “qualifying person” is usually a dependent child, parent or other relative, but there are special rules for determining who counts.

Qualifying widow(er) with dependent child. If you're a widow or widower, you can file a “Married filing jointly” tax return (if you otherwise qualify) along with your deceased spouse for the tax year during which he or she died. You cannot file a joint return with your deceased spouse after this year.

For the two years following the year your spouse died, if you meet the conditions, including having a dependent child and not remarrying, you can file using the "Qualifying widow(er) with dependent child" status. Although you won't file a joint return, the status lets you use the same tax rates and the highest standard deduction amounts (if you don’t itemize).

 

What about your state tax return?

The federal filing status you use will generally be the same one you use for your state return, but there could be exceptions.

For example, in New York, you generally must use the same status as the one on your federal return. However, if you're married and filed a joint federal return, there are certain instances where you can choose to use “Married filing separately” on your New York state return.

You should generally check with your state's tax authority before assuming which filing status you should use. This can help you determine which of the possible statuses will be best for you.

 

About the Author: Louis DeNicola is a personal finance writer and educator. In addition to being a contributing writer at Credit Karma, you can find his work on MSN Money, Cheapism, Business Insider and Daily Finance. When he's not revising his budget spreadsheet or looking for the latest and greatest rewards credit card, you might spot Louis at the rock climbing gym in Oakland, California.

Disclaimer: We know taxes are complicated, so we provide this information for general educational purposes only. It isn’t intended to be personalized legal, financial or tax advice, and we don’t guarantee the accuracy, completeness or reliability of this content. If you have questions about your personal tax situation, consider contacting an accountant, tax attorney or financial advisor. Come back to Credit Karma Tax when you’re ready to file your taxes for free!

 

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