Did you know that there is a filing status for your tax return? And this filing status might vary during the tax year? If no, then you need to do some reading and get to know more about your filing status and how knowing about it can help you reduce your tax liabilities.
When you file your federal income tax return, there is a special filing status that accompanies it. This status, in some cases, changes during the tax year and sometimes does not. But, how and why do you need to bother about this status is the real deal. If it does not change, then you certainly know what taxes you owe or refund you are going to earn at the end of the tax cycle. But, if at all, it changes, it implies that you might need to pay more or deserve an additional tax credit, or need to attach some other documents to earn a better tax break.
Let us look at how knowing your tax filing status can help you. It can help you with:-
- Finding out if you need to file a tax return or are eligible for a tax refund.
- Ascertaining your tax deduction amount.
- Exploring your eligibility for certain tax credits.
- Ascertaining your tax dues for the current tax year.
What decides your tax filing status?
Your tax filing status depends upon your marital status. If you are married or single as on 31st December of the running tax cycle, this status becomes your status for the whole year.
What are the various filing statuses?
There are various filing statuses that depend upon your marital status and financial standing in your family. Let us look at the different filing statuses to find out which one you belong to.
Single: This would be your filing status if you are unmarried, divorced, or legally separated as per a divorce or state maintenance decree.
Married filing jointly: This would be your tax filing status if you are married and filing a joint return with your spouse. If in case, your spouse passes away during the year, mostly you would be eligible to still file a joint return during that tax year.
Married filing separately: This would be your tax filing status if you are married but decide to file a separate tax return for the tax cycle in question. This may result in you owing a less amount of tax than in case of filing jointly.
Head of Household: You can file your return with this status if you are single, but then you would need to fulfill some eligibility criteria. It includes paying more than half the cost of their household and a qualifying person living therein for at least half the year. It is advisable that you take a quick read of all the eligibility criteria required for filing under this head.
Qualifying widow with dependent child: You would need to file under this head if your spouse passed away in any of the two previous tax years, and you have a dependent child. There are a few other conditions that apply, and hence, exploring those before filing would be ideal.
The Bottom Line
Your tax filing status decides the amount of tax you owe or the amount you will get back as a refund. Another benefit of being aware of your tax filing status is that if you qualify for more than one status, you can choose the one which gives you a higher benefit. As MyTaxFiler’s tax experts always insists, being aware of tax codes and related matters will always help you make the most out of your tax returns and reduce your tax liabilities. For a quick expert discussion to understand your tax filing status and its implication on your return, contact your MyTaxFiler expert today.