What's my filing status for IRS tax purposes?

One of the first things you'll need to do when preparing your IRS tax return is to choose the proper IRS tax return filing status. Your IRS tax return filing status is based upon your marital and family situation. Your IRS tax return filing status will determine which tax rates apply to your taxable income. Under our graduated income tax system, as your income rises, not only does your total tax bill go up, but the percentage of tax that your additional income is taxed at also increases. The lowest percentage of tax the IRS claims is 15% - the highest percentage of tax the IRS claims is 39.6% (not including phase-outs, etc.). Your IRS tax return filing status also determines the total standard tax deduction(s) you can claim on your IRS tax return. The filing statuses are Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow or Widower.

If more than one filing status applies to you, you may choose the one that will give you the lowest tax on your IRS tax return. You should review the Tax Rate Schedules below for the various filing statuses.

You must choose your IRS tax return filing status from one of the following options:

Single
Married Filing Jointly
Married Filing Separately
Head of Household
Qualifying Widow(er)

Single

Your IRS tax return filing status is single if you are unmarried as of December 31, 2000. However, if you are unmarried and have children, you may be able to file your IRS tax return as head of household. In most instances filing your IRS tax return as head of household offers tax advantages because, as you can see from the Tax Rate Schedules above, the tax rates are lower.

Married Filing Jointly

Most married couples choose to file their IRS tax return as married filing jointly. Your marital status is determined as of December 31, 2000. When this IRS tax return filing status is chosen, the taxable incomes of both spouses are combined on a single IRS tax return, and tax is applied to the total taxable income. Married filing jointly usually offers tax advantages over the married filing separately option.

Generally, you and your spouse may file a joint IRS tax return if you are both U.S. citizens or resident aliens and can satisfy any one of these IRS requirements:

• you are married and live as husband and wife;
• you are living together in a common law marriage recognized by the state in which your marriage originated;
• you are married and live apart, but you are not legally separated under a decree of divorce or separate maintenance;
• you are separated under an interlocutory decree of divorce, but the decree did not become final during the tax year.

Under IRS rules, if you are married you must file your IRS tax return jointly to do any of the following:

• take an IRA tax deduction for a non-working spouse;
• claim the tax Credit for the Elderly unless you lived apart for the entire tax year or can file your IRS tax return as head of household;
• claim the Dependent Care Tax Credit or Earned Income Tax Credit unless you live apart and can file your IRS tax return as head of household.

When a husband and wife file a joint IRS tax return each is usually liable for the entire tax. This is true even if the income shown on the IRS tax return was earned by one spouse. However, one spouse may be able to avoid tax liability under the Innocent Spouse Rules.

As a widow or widower, you may file a joint IRS tax return with your deceased spouse for the tax year in which he or she died, provided that you do not remarry within that tax year. If there is a remarriage within that time, it may be possible to file your IRS tax return jointly with your new spouse if all other requirements are met. 

If one spouse is a non-resident alien you can file your IRS tax return jointly only if you make an election to be taxed on all your worldwide income and agree to supply all pertinent and necessary documentation of tax liability.

Married Filing Separately

The Married Filing Separately status is sometimes used  by separated couples, or may be advisable when the spouses have disproportionate levels of taxable income and/or tax deductions on their IRS tax return.

Married couples must select married filing separately status for their IRS tax return when any of the following conditions apply:

• one spouse files a separate IRS tax return;
• a spouse is claimed by someone else as a dependent on their IRS tax return;
• each spouse uses a different tax filing year on their IRS tax return. This happens when one spouse is a calendar year taxpayer and the other is a fiscal year taxpayer; or
• one spouse is a non-resident alien, and they do not choose to be taxed by the IRS on the non-resident alien's worldwide income.

NOTE: If you didn't live with your spouse for the last half of 2000 and you have a child that lived with you for most of the tax year you may be able to file your IRS tax return as Head of Household. The tax rates are lower. See the IRS tests below.

Should we file our IRS tax return(s) separately or jointly?

A married couple may file separate IRS tax returns, in which case each would report only their own taxable income and claim only their own tax deductions and tax exemptions on their IRS tax return. You should compute your IRS tax liabilities both jointly and separately to determine which method will result in less tax. Filing your IRS tax returns separately may decrease the phase out of the personal tax exemptions to which you would otherwise be subject. However, by filing your IRS tax returns separately, the Elderly and Disabled Tax Credit, the Child and Dependent Care Tax Credit, and the Earned Income Tax Credit among others, may not be claimed on your IRS tax returns. All of these factors should be taken into consideration in deciding whether to file your IRS tax return(s) jointly or separately.

Filing your IRS tax returns separately may prove advantageous if, for example, either spouse has high medical expenses. Because medical expenses are tax deductible to the extent that they exceed 7.5% of adjusted gross income (AGI), one spouse may be able to make better use of itemized tax deductions on a separate IRS tax return, where the AGI may be considerably lower than if a joint IRS tax return is filed. However, if one spouse itemizes tax deductions on his/her IRS tax return, so must the other.

Head of Household

You may choose to file your IRS tax return as a Head of Household if you are not married (as of December 31, 2000) and have at least one child or relative who can be claimed as a dependent on your IRS tax return.  You must meet these IRS tests:

• you are not married at the end of the tax year;
• you maintained a household for more than one half of tax year 2000 for your child or for another relative you claim as a dependent on your IRS tax return;
• you paid more than one half the costs of the household including property tax, mortgage interest, rent, utilities, upkeep, property insurance, domestic help, and food. These costs do not include clothing, education, medical and transportation expenses, vacations, or life insurance.; and
• you are a U.S. citizen or resident alien for the entire tax year.

If you are married, you may be permitted to file your IRS tax return as a head of household if you meet the following IRS tests:

• you did not live with your spouse for the last six months of 2000;
• your house was the primary home for your child, adopted child, or step child for more than one-half of 2000. For foster children the rule is the entire tax year.;
• you claim the child as a dependent on your IRS tax return. If the non-custodial spouse is entitled to claim the child as a dependent on his/her IRS tax return disregard this IRS rule;
• you provided over one-half of the cost of maintaining your home including property tax, mortgage interest, rent, utilities, upkeep, property insurance, domestic help, and food. These costs do not include clothing, education, medical and transportation expenses, vacations, or life insurance.

If you contribute less than 50% of the support for both of your parents you may be able to qualify as Head of Household if you establish one of you parents as a dependent on your IRS tax return. Do this by providing more than 50% of the support for one of your parents and making notations on the checks accordingly.

Qualifying Widow(er)

Generally, a surviving spouse with dependent children is entitled to file an IRS tax return using the married filing jointly tax tables for the two tax years following the tax year in which the spouse died.

If your spouse died in 1998 or 1999, and you did not remarry, you may elect to file a joint IRS tax return with your deceased spouse if you meet these IRS tests:

• you have a child, step-child, adopted child or foster child whom you can claim as a dependent on your IRS tax return;
• your child lived in your home for all of 2000 (note that temporary absences for school or vacation count as time at home);
• you paid more than one-half of the cost of maintaining the home for the child;
• you could have filed a joint IRS tax return with the deceased spouse in the year of death even if you did not actually do so;
• you did not remarry before January 1, 2001.

If you and your spouse's incomes are about the same the best month to get divorced is December. That way you can both file your IRS tax returns as "Single". However, if your incomes are substantially disproportionate, you should get divorced in January. That way you can file your IRS tax returns jointly and claim a tax exemption for your spouse.

Likewise, if your incomes are substantially disproportionate, you should get married in December.