-WHAT FILING STATUS SHOULD I USE? -
If you live in a community property state, there is seldom any advantage to filing separately since most income is ‘community income.’ In other states, it is still generally better to file a joint return. If you are single, you may be eligible to file as Head of Household (HOH) which would give you a $2,400 larger standard deduction. It also affects the threshold at which the deduction for exemptions begin to phase out. The phase-out for HOH begins at $188,150 and for filing single at $150,500.
The information below explains the rules and is quoted from the IRS’s Tax Tips (TT-2007-03)
CHOOSE YOUR CORRECT FILING STATUS
Your federal tax filing status is based on your marital and family situation. It is an important factor in determining whether you must file a return, your standard deduction and your correct amount of tax.
Your marital status on the last day of the year determines your status for the entire year. If more than one filing status applies to you, you may choose the one that gives you the lowest tax obligation.
There are five filing status options:
1. Single. Generally, if you are unmarried, divorced or legally separated according to your state law, your filing status is Single.
2. Married Filing Jointly. If you are married, you and your spouse may file a joint return. If your spouse died during the year and you did not remarry, you may still file a joint return with that spouse for the year of death.
3. Married Filing Separately. Married taxpayers may elect to file separate returns.
4. Head of Household. You must be unmarried and paid more than half the cost of maintaining a home for you and a qualifying person.
5. Qualifying Widow(er) with Dependent Child. If your spouse died during 2004 or 2005, you have a qualifying child and meet certain other conditions; you may be able to choose this filing status.
For more information about filing status see publication 501, Exemptions, Standard Deduction, and Filing Information available on the IRS website at IRS.gov or by calling 1-800-TAXFORM (1-800-829-3676).
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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.