The benefits available to you at tax time, as well as tax rates and deduction amounts are dependent upon the filing status you choose. Your filing status is determined by your marital situation on the final day of the year, and whether or not you have any dependents.
Married- Joint or Separate?
If you are married as of December 31st, as far as the IRS is concerned, you are considered married for the entire tax year. If a married person lives in a separate home than their spouse and has a dependent, there are special circumstances which may allow the person to claim Head of Household as a filing status.
Married, Filing Jointly occurs when a couple files a single tax return together, while Married, Filing Separately requires each person to complete a separate return. Filing jointly means both spouses’ incomes, in addition to deductions, are combined. Often, filing jointly can save you money when you file your return. If for any reason you need to keep your finances separate from your spouse’s, or you’re in the process of a divorce, you should consider filing separately.
Single – Head of Household
Anyone who was not legally married by December 31st of the tax year typically falls under the status of single filer. If you aren’t married but have a dependent to claim, you usually can get additional benefits by filing Head of Household. This tax status offers a higher standard deduction in combination with lower tax rates than just filing under a single status.
If the death of a spouse has occurred during the tax year, there are two options for filing: Married, Filing Jointly, or Married, Filing Separately. If the death of the spouse was within two years prior to this tax year, the taxpayer should file as Qualifying Widow or Widower, which allows the same standard deductions, as well as an equal tax rate to if you filed jointly while you were married.