Your Tax Status

Your Tax Status

How do you determine your tax status and what are the differences between each one? Although not a tough question, it can mean a lengthy answer, and I'm afraid in this situation, it's going to be a lengthy response.

There are five ways in which you can classify yourself for your tax filing status: single, married filing jointly, married filing separately, head of household or qualifying widower with dependent child. The remainder of this article will examine each of these, and how you determine your correct status. Please note here, that if more than status will apply to you, you should choose the status that provides for the greatest tax benefit.

Let's start with the simple one: single. Determining your status as a single filer should be a simple one, but you would be amazed at the different situations that exist that can qualify the taxpayer as single. For instance, if you are legally separated at the year end, then you are considered single for the entire year. If you have no dependents and you are unmarried, you are considered single. There are other conditions under which you are considered single, such as annulled marriages. If you obtain an annulment of your marriage, then you are considered single as though the marriage never existed, even if you filed joint returns in earlier years. If you obtain a divorce in one year, simply to be able to file separate returns as single individuals, but remarry during the next year, you are considered married, and should have filed returns as married filing jointly or separately, not single.

If you meet all the rules of the single tax status, but you have a dependent, or you are widowed during the year, and have dependents, your filing status would be head of household or widow(er) with qualifying dependent child, not single.

How do you determine your status as a married taxpayer? Well, there are simple qualification tests that determine your legal filing status and if you're considered as "married". If you are legally married and living together as husband and wife, you would of course be considered married. If you are living together in a common law marriage that is recognized in the state in which you reside, or the state where the common law marriage began, then you are considered to have a filing status of married. You are considered to be married if you are married but living apart, however are not legally separated under a decree of divorce or separate maintenance agreement. If you're separated under an interlocutory (not final) decree, then you are considered as married.

Now, there are certain extenuating circumstances that must be considered before deciding your legal filing status. For instance, if you were widowed during the year and do not remarry, you may file as married with your deceased spouse for the year in which he or she passed, and then file as a widow(er) with qualified dependents for the next two years, provided you do not remarry. If you remarry within the year that your spouse was deceased, you would file as married with your current spouse, and file your deceased spouse as married filing separately. It's truly amazing at the unique and odd situations that are created by we taxpayer's and even more unique in the ways that they affect our tax situation.

If you are married and choose to file a joint return, your tax status would be married filing jointly. All income to the household must be included on the one return, and both spouses must sign and date prior to submitting the return to the Internal Revenue. All exemptions, deductions, and credits are also reported on the joint return; in addition to sharing joint filing status, you also share joint responsibility and liability for the information reported on the tax return. You can however, ask for relief from joint responsibility, in the following three ways: innocent spouse relief, separation of liability for spouses who have not lived together for the previous 12 months, or equitable relief which essentially shares the liability between the filers.

There are sometimes reasons that a spouse cannot sign the tax return, one of the more interesting situations exists when the spouse is away in a combat zone for the military. In this type of situation, you may sign for your spouse, and attach a separate information statement that explains why it was necessary for you to sign.
As you can see, choosing a tax filing status, and then understanding your responsibilities and rights, can be a very tedious, and frustrating experience.