If you’re not sure about your filing status, the IRS has released Tax Tip 2011-09 to assist you in choosing the correct one. Choosing the correct filing status is important because it determines the amount of your standard deduction for the year. For 2010, a single individual receives a $5,700 standard deduction, while a married taxpayers filing a joint return receive twice that much for a total deduction of $11,400. Taxpayers filing as head of household receive an $8,400 deduction. A married taxpayer filing a separate return from their spouse receives the same standard deduction as a single individual. A taxpayer who is filing as a qualifying widow(er) will receive the same standard deduction as married filing jointly taxpayers.
The standard deduction represents the amount of income that one may receive completely free of tax. In other words, you are allowed to reduce your taxable income by the amount of the standard deduction for your filing status. Therefore, a single individual will deduct $5,700 from their income before determining the amount of tax they owe. Additionally, all individuals also receive a $3,650 personal exemption which also reduces the amount of income subject to taxation. Therefore, a single individual who earns $9,350 ($5,700 + $3,650) or less would not owe any federal income tax. A married couple filing a joint return (both spouses under age 65) could earn up to $18,700 ($11,400 + $3,650 + $3,650) before they would owe any tax.
Each filing status has unique rules that apply that will render a taxpayer either eligible or ineligible for a particular filing status. Here are the eight facts the IRS wants you to know about filing statuses:
- Your marital status on the last day of the year determines your marital status for the entire year.
- If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
- Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
- A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
- If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
- A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
- Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
- You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2008 or 2009, you have a dependent child and you meet certain other conditions.
More information about filing statuses can be found in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.