As tax law is very complicated, this article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advise. You should contact us with any specific questions so we can properly interpret how the tax laws applies to your situation. Killingbeck Tax Preparation, Kokomo, Indiana. 765-452-8000.
How Does Filing Status Affect Me?
- The filing status determines
- the tax tables that apply,
- the standard deduction taxpayer gets, and
- what credits and deductions taxpayer gets.
- The tax rates for Head of Household and Qualifying Widow are better than Single rates.
- Married Filing Separate pays higher rates.
How Do You Determine Filing Status?
Filing status is based on whether taxpayer is Married or Single on last day of the year, 12/31.
When Do I File as Single?
Includes unmarried & divorced people who do not qualify as Head of Household (see below for Head of Household rules). Some states (not Indiana or close states) have separate maintenance agreements that qualify as single.
When Do I File as Married Filing Joint?
A taxpayer is considered married even if he/she didn’t live with spouse at end of year (except if qualify as a Head of Household. See below.)
Same sex married couples must file with the same rules as other married couples.
State of Indiana says to use same filing status as federal.
Can file joint if spouse dies during year unless remarried. If remarried, can file jointly with new spouse, deceased spouse files separately.
Best to file joint 97% of the time.
Joint return irrevocable after April 15th except by an executor appointed after the due date or if marriage is annulled.
Both spouses are held jointly liable for taxes. EXCEPTION: Innocent spouse rule and relief for separation and divorce. See these rules in dependent section.
Both spouses must sign the return or not joint return.
Only able to file with spouse who is a non-resident alien if taxed on worldwide income.
When Do I File Married Filing Separately?
Usually gives largest overall refund to file jointly. Not always practical.
1. Reasons to file separately
- Separated couple not getting along.
- One spouse may want a larger tax refund.
- One spouse doesn’t want to be jointly liable on tax return.
- High medical bills by one spouse.
- Large 2106 expenses limited by 2% of AGI.
- Large misc. itemized deductions, repaid income.
- Capital losses offsetting gains, Casualty loss.
2. Must include spouse's name and SS #
3. If one itemizes the other must also.
- This rule does not apply to a spouse who qualifies to file as Head of Household, but does to other spouse.
- Each reports only their income & deductions.
4. Can't claim these credits & deductions if file separately unless qualify as
Head of Household (see rules below).
Earned Income Credit. (Can claim Child Tax Credit.)
Premium Tax Credit. Dependent or Child Care
American Opportunity Education Credit
Lifetime Learning Credit
Student Loan Deduction
- 85% of Social Security becomes taxable.
- Rental losses are not allowed unless lived apart all year. (up to $12,500)
- IRA deduction for non-working spouse
- Adoption credit
- Elderly-disability credit
5. Can amend a separate return to a joint.
6. Can claim an exemption for spouse on a separate return if spouse
has no income, not filing, and not anothers dependent.
7. For a community property state, each reports half of community property
income on separate returns unless lived apart all year.
Community property states are Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington, Wisconsin.
When Do I File Qualifying Widow(er)?
Note in year of death it is best for taxpayer to file jointly.
Requirements to file as Qualifying Widow (er):
1. Spouse died in 2 years before current tax year.
2. Taxpayer paid over half the cost of the household.
3. Did not remarry and could have filed with spouse in year of death.
4. Has a child or stepchild who lived with taxpayer the
entire year except for temporary absence or death or birth.
a. Can’t claim a foster child unless legally adopted.
5. Claims child as a dependent.
6. Can't claim an exemption for deceased spouse.
When Do I File as Head of Household?
To qualify as Head of Household the taxpayer must meet these tests.
1. Taxpayer Can’t Claim HOH if Someone Else:
Claims EIC or Dependent Care on the qualifying individual or claims
the qualifying individual as a dependent except if claimed as a
dependent by a noncustodial parent.
For details on these rules and examples see dependent section.
2. Taxpayer Is Not Married at end of year or is Married and meets
Lived apart from spouse at all times during last 6 mo. of year.
(Military deployment not considered living apart.)
Taxpayer claims child as a dependent unless spouse has 8332
or can claim due to divorce decree before 2009 (see dependents section).
Child is taxpayer’s child, step child or legally placed foster child.
3. They Paid More than ½ cost of Their Home or of a Home for Their Parent(s).
Home costs are property taxes, mortgage, interest, rent, utilities,
repairs, insurance & food. (Nursing home for parent might qualify)
Watch who pays. Welfare funds are considered furnished by others.
4. Taxpayer Must Be U. S. Citizen or Resident Alien of U.S., Canada or Mexico for the Entire Year.
5. The home was a principle residence for more than ½ the year* of
one of these relatives:
*Exception for temporary absence. See definition below this section.
A. Taxpayer’s Relative listed below AND a Dependent:
See rules for dependents in dependent section.
- child, step child, foster child, or descendents (no age restriction)
- brother, sister, half-brother or sister & their children
- parents, grandparents, stepparents and stepsiblings
- son-daughter in law, mother- father in law, or brother-sister in law
- If related by blood an uncle, nephew, aunt, niece.
- Relative must be a dependent. See dependent section for rule.
B. Is Unmarried qualifying child who isn’t their dependent & is their
- son, daughter, stepchild, foster child, brother, sister, step-sibling,
half-sibling, or a descendant of any of these
- Is under 19, under 24 & a full time student or any age & disabled.
- Did not provide over half of their own support.
- Did not file a joint return except if both get back taxes withheld.
- Is U.S. citizen, resident alien or national, resident of Canada or Mexico.
C.Taxpayer’s MARRIED qualifying child who is not a dependent
just because TAXPAYER can be claimed as a dependent on anothers
return or child doesn’t file Joint except if both just got taxes withheld back.
D.Taxpayer’s qualifying child (see B above) who is not a dependent
just because of rules for Children of divorced or separated parents.
See dependent section for these rules.
Temporary Absence Is Where
taxpayer feels dependent will return to home. Includes education, vacation, illness, detention in a juvenile facility, military & nursing home for unspecified time. Example: Maintaining a room with their clothes. Can also count as ½ year if child died or was born.
A. If dependent did not return during the year and sets up their own permanent residence by year end, does not qualify as temporary absence.
Noncustodial Parent’s Rules
A. If Noncustodial parent meets all the following requirements they
can claim the dependent and the child tax credit.
1. Parents lived apart all of last 6 months of the year.
2. Child lived with 1 or both parents over ½ the year.
3. Child received over ½ support from parents.
4. Child under 18 1/2 at year end.
5. An 8332 or qualified divorce decree (prior 2009 with no restrictions)
qualifies them to claim. (See page 9 for full details.)
B. If noncustodial parent doesn’t meet above rules, see dependents rules
to determine who is entitled to claim dependent.
C. The Custodial parent (or grandparent, sibling or other ancestor, if they
qualify) can still claim Head of Household, Dependent Care and EIC.
IRS ruling on 2 Family Homes
Each family can claim Head of Household where each is single and each is contributing significantly
to household expenses.
Can not claim Head of Household on your child who
doesn’t meet age test unless claimed as a dependent or disabled.
Example: Child age 19 and over (not a student) who lives with taxpayer, can’t claim Head of Household unless you can claim the child as a dependent.
Give us a call if you have questions or we can be of help, 765-452-8000. Killingbeck Insurance & Tax Preparation, Kokomo, Indiana.