What’s Your Tax Filing Status?

Everybody has heard about tax filing status but do you know exactly what they are and which one you should use?  Many people don’t.  The IRS does a great job of explaining the different options on their site but you may not want to dig through all of the articles to find it so I thought I would give a brief run down of the different options.


First, you have to consider two things when determining your tax filing status:


What was your marital status on the last day of the year?  If you are getting ready to start your taxes for 2008, what was your marital status on December 31st, 2008?  Next, if more than one filing status applies to you, choose the one that gives you the lowest tax obligation.  You’re not cheating the government by doing this.  This guideline is straight from their website.


Now that you know the two things to consider, let’s look at each of the tax filing status choices and figure out which applies to us.  Remember that is very probable that more than one will apply.


The first is “Single.”  If you are unmarried, divorced or legally separated according to the laws of your state, you are “single.”


The next is “Married Filing Jointly”.  If you are married, you and your spouse may file a tax return together.  The biggest obligation that makes this applicable to you is that you as an individual must have paid more than half the cost of maintaining a home for you and your spouse to qualify.


If you are married and the above rule does not apply to you, consider filing as “Married Filing Separately.”  This is simply two people that are married filing separate returns.  If you are married, remember that you have at least two options for filing.  Many tax preparation software packages allow you to compare the options to see which results in a smaller tax liability (or higher refund) for you.


Next, “Head of Household” applies to somebody who is unmarried and paid more than half the cost of maintaining a home for yourself and somebody else, (referred to as “a qualifying person” by the IRS)

Finally, qualifying widow(er) with dependent child. If your spouse passed away in 2006 or 2007 and you have a dependant child, you may qualify for this deduction.  There are other conditions that may apply so it is suggested that you see a tax professional if you are going to use this as your tax filing status.

Remember to try the different options that apply to you to see which will provide you with the best deduction.

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