How Do You Determine Your Filing Status for Income Taxes?

By: Brandi Morgan, CPA

It is very important to select the correct filing status as this will impact the amount of your standard deduction and your tax rate. You may fall into more than one category, so you should choose the one the produces the lowest overall tax. An individual may be single, a surviving spouse, head of the household, married filing jointly, or married filing separately. Filing status is determined on the last day of the tax year.

The basis standard deduction amounts for 2016 are:

  • Single 4,050
  • Married filing jointly and surviving spouses 12,600
  • Married filing separately 6,300
  • Head of Household 9,300

You are considered single for the whole year if on the last day of the tax year, you are unmarried or legally separated under a divorce or separate maintenance agreement. You are considered unmarried if you and your spouse did not live in the same household for the last six months of the tax year. If your home was the main home for a qualifying child or relative and you provided more than half the cost of keeping up your home for the tax year, you are eligible to file as head of household instead of single which provides a higher standard deduction and lower tax rates.

A single taxpayer qualifies as a surviving spouse during the two years following the death of a spouse if the household is maintained for a dependent child and you do not remarry. Tax brackets for surviving spouses are more favorable than filing single.

Married individuals may opt to file jointly or separately even if only one spouse had income. In most situations, it is advantageous to file a joint return due to higher deductions and lower tax rates; however, there are special circumstances where filing separately produces a lower tax bill. It is advisable to calculate your tax both ways and use the filing status that yields the lowest aggregate tax. Considerations other than tax savings should also be considered. If you believe your spouse is not reporting all of his or her income or you do not want to be held responsible for any taxes due because your spouse did not have enough tax withheld or pay enough estimated tax, filing separately may be ideal.

If you are unsure which status applies to your situation, consult your tax advisor.

Brandi Morgan is a CPA and Manager at Wilkins, Miller, Hieronymus LLC, Certified Public Accountants and Advisors. She can be reached at wilkinsmiller.com or 251-410-6700. Her office is located at 41 West Interstate 65 Service Road North, Suite 400, Mobile, Alabama 36608.