The filing status is critical to determine your filing requirements, eligibility to certain credits, and correct tax. Internal Revenue Service (IRS) provides five filing status categories:
A taxpayer can file the single status if the taxpayer is considered unmarried or legally separated at the end of the tax year. A single taxpayer may also be eligible to file Head of Household or Qualifying Widow status, if the taxpayer satisfies certain requirements.
Head of Household (HOH)
Compared to the single status, HOH contributes to a lower tax from a larger standard deduction. A single or legally separated taxpayer may be qualified to file HOH, if the taxpayer provides a home for a qualified individual for more than six months. The qualified individual could be a qualifying child or qualified relative based on the tax code. A qualified relative must pass the qualified relative test.
Qualified Relative test
1. Citizenship: The individual must be a U.S. citizen, U.S. resident alien or a resident of Mexico or Canada.
2. Filing status: The individual must not file a joint return for this tax year. The individual is not claimed as a qualifying child of you or any other taxpayer.
3. Support: You provide more than half of the person’s total support for the tax year, or more than 10% of the support if two or more people provide the person’s total support.
4. Income: The individual has gross income of less than $4,050 in 2016.
5. Residence: The individual, a relative or not, lived with the taxpayer as a member of the household for the whole year.
Qualified Widow (QW)
A taxpayer may file the QW for the first two years after a spouse died, if the surviving spouse does not remarry and pays over half the cost of keeping up a home, where the dependent child lives for the whole year.
When you are qualified for more than one filing status, you may choose the one that will result in the lowest amount of tax. The taxpayer must have a dependent child to qualify for this status.
Married Filing Joint (MFJ)
A taxpayer can file the MFJ status if the taxpayer is married at the end of the tax year, living with the spouse in a common-law marriage recognized in the state. If a taxpayer’s spouse died during the year and the taxpayer didn’t remarry, the taxpayer is still qualified for this status.
Married Filing Separately (MFS)
A married taxpayer may choose to file a separate tax return. Generally, the deductions, incomes and credits will be split in 50/50. Moreover, some credits and tax benefits are disallowed under this status. Therefore, a married taxpayer generally pays more tax by filing MFS.
Alien Tax Status
An alien is taxed as a nonresident alien. However, the individual may be taxed as a resident alien (U.S. citizen) for tax purpose, if the individual passes two tests: the Green Card test or the Substantial Presence test. Moreover, an alien could be both a nonresident alien and a resident alien, in the year of arriving, departing from U.S. or changing immigration status. In this case, the individual will file as a “dual-status alien” and specific rules will apply.
IRS Circular 230 Disclosure
Pursuant to U.S. Treasury Department Regulations, information contained in this article is not intended by TOPC Potentia P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.