Tax Filing Status? Rules and How It Affects Your Tax Liability

Your filing status has a significant impact on the taxes you owe. It determines your standard deduction, your eligibility for certain credits, and if you're married, your liability for your spouse's taxes. The options are single, head of household married filing jointly, married filing separately, and qualifying widow(er) – To optimize your tax situation, you need to choose carefully and ensure you're following the rules. 

This blog outlines the different types of filing statuses. Then, it explains how they affect your tax due and what to consider when you choose a status. To get help with tax problems now, use TaxCure to connect with a tax professional today. 

Key Takeaways – Why your filing status matters

• Your filing status directly affects your income tax rates, credits, and deductions.
• Most filing statuses are based on your marital situation and dependents.
• Married filing jointly vs separately determines whether or not you're liable for your spouse's taxes.
• The IRS automatically fixes many filing status errors.
• Claiming the wrong status to reduce your tax bill may lead to penalties and even tax fraud charges. 

IRS Tax Filing Statuses

Here are the five options: 

 

• Single – Taxpayers who are unmarried on the last day of the tax year including legally separated or divorced taxpayers who do not qualify for head of household status. Also includes widowed taxpayers the year after their spouse dies who do not qualify to file as a qualifying widow(er). 
• Married filing jointly – Taxpayers who are married on the last day of the tax year or widowed during the tax year, who want to report their income, tax credits, and deductions on a single return. Both taxpayers are liable for the taxes due shown on a jointly filed return, even if they later divorce or one of them dies.
• Married filing separately – Taxpayers who are married on the last day of the tax year or widowed during the tax year, who don't want to file a tax return together. Taxpayers are only liable for the taxes shown on their individual returns unless they live in a community property state.
• Head of household – Taxpayers who are unmarried on the last day of the tax year who provide over half the cost of maintaining a home for a qualifying dependent. Also available to married taxpayers who don't live together and meet certain criteria.
• Qualifying widower – Available to widowed taxpayers with a qualifying dependent(s), for two years after they are no longer eligible to file as married. 

 

Detailed Scenarios and Considerations

The rules are complex – let's outline the different scenarios where taxpayers claim each of these filing statuses:

Single Filing Status

File as single if you're unmarried without dependents or legally separated on the last day of the tax year. If you were widowed during the year, don't file as single – instead, file as married as explained below.

If you're married and living apart, you generally must file as married (or head of household if you meet the criteria outlined below) unless you have a formal separate maintenance agreement. 

Married Filing Jointly (MFJ)

File as married filing jointly if:

• You are married on the last day of the tax year and want to share tax liability.
• Your spouse died during the tax year and you want to share tax liability.

You can also use this status if you are married, living apart, don't have a separate maintenance agreement, and want to share tax liability. 

Married Filing Separately (MFS)

Use this status if you are married on the last day of the tax year but don't want to share tax liability – or if your spouse died during the year and you don't want to share tax liability. Couples choose this status if they don't want to be liable for their partner's taxes or if they suspect their partner of tax fraud or evasion. Note that you may still be liable for your spouse's taxes if you live in a community property state, regardless of whether you use this filing status. 

Married filing separately generally prevents you from getting many tax credits including the earned income tax credit and the child tax credit. However, you can claim these credits if you lived apart from your spouse for the last six months of the year, or if you lived apart on the last day of the year and have a separate maintenance agreement. 

Head of Household (HOH)

Head of household gives you a slightly higher standard deduction than filing as single, and you can claim this status if you're unmarried and claim a qualifying child or relative as a dependent. 

If you are married, you may qualify to claim this status if you:

• File separately from your spouse
• Paid more than half of the cost of keeping up your home.
• Lived apart from your spouse during the last six months of the year (not counting temporary absences for military service or education)
• Provided the main home for more than half the year for a qualifying child

If you have a qualifying dependent, you may also be able to claim this status if you are married to a nonresident alien spouse even if you lived together during the year.

Qualifying Widow(er) with Dependent Child

If your spouse dies and you have a qualifying dependent, you can file as a qualifying widow(er). This filing status gives you the same standard deduction as married filing jointly, but some credits as well as the income thresholds for certain credits may be calculated as if you are a single filer. 

In the year your spouse dies, you should file married jointly or separately. Then, for the next two years (as long as you have a qualifying dependent), you can choose the qualifying widow(er) filing status. A qualifying dependent includes a child under the age of 19, a child who is a full-time student under the age of 24, or a child of any age who was permanently disabled before the age of 18.

Note that you cannot claim this status if you get remarried. Also, if you remarry in the year that your spouse dies, you should file as married with your new spouse – you cannot file as married with your late spouse in this situation. 

What Happens If You Choose the Wrong Filing Status?

If you accidentally choose the wrong filing status, the IRS will generally just change the status and update your return accordingly. Typically, this only happens if you file on paper – most tax prep software will not allow you to accidentally pick the wrong filing status. 

However, if you choose an incorrect status to increase credits or reduce your tax bill, the IRS may assess penalties and potentially even ban you from claiming certain tax credits in the future. In cases of willful tax evasion, the IRS may recommend criminal charges. Typically, this happens when someone files as head of household, but they don't actually pay for half of the home's upkeep. 

Tax Implications of Choosing the Wrong Filing Status

Choosing the wrong status can unnecessarily increase your tax burden, reduce your tax credits, and/or make you liable for your spouse's tax debt. The exact implications vary based on the filing status:

Filing as Single Instead of Head of Household

• Miss out on a larger standard deduction – potentially increasing your tax due.
• Face higher tax rates on taxable income.

Filing as Married Filing Separately (MFS) Instead of Jointly (MFJ)

• Potential exposure to higher tax rates, depending on income level.
• Loss of tax credits, including the Child Tax Credit (CTC) and education credits – note that there are some scenarios where you can claim these credits if you file separately.
• May not protect you from your spouse's tax liability if you live in a community property state.

Filing as MFJ Instead of MFS

• Liable for your spouse's tax debts.
• You cannot amend MFJ returns to change the status to MFS. However, if you catch the mistake before the filing deadline, you may be able to file a superseded return.
• Learn more about MFJ vs. MFS.

Filing as Head of Household Instead of Single or Married

• If you don't qualify to file as head of household, the IRS may assess additional tax plus interest and penalties against you.

FAQs About Tax Filing Status

Can I choose any filing status I want?

If you are married, you can choose between married filing separately or jointly. Otherwise, your marital status on the last day of the tax year, your dependents, and your household situation during the tax year determine your filing status. 

If my spouse and I are separated but not divorced, can I file as single?

Yes, if you are legally separated on the last day of the tax year, you may file as single. And, if you meet specific criteria, you may qualify for Head of Household status.

Can both parents claim Head of Household if they are unmarried and share custody?

Generally, no. Only the parent who provides more than half of the household expenses and where the child lived for more than half the year can claim Head of Household status. However, if both parents have a dependent that qualifies them for head of household status, they may both qualify to file as HOH – the same dependent cannot be used on multiple returns to qualify for this status.

For instance, say that Alex and Frankie have two children named Lexie and Brooklyn. After their divorce, Alex pays for the majority of the children's expenses and thus is entitled to claim the head of household status. 

They share custody and the divorce decree allows each parent to claim one child for the purposes of the child tax credit. Unfortunately, despite being single with a dependent on the tax return, Frankie is not entitled to claim the head of household status due to not providing more than half of the upkeep for that dependent.

Can I file as head of household if my ex-spouse claims the Child Tax Credit for our child(ren)?

Yes, there is a spot on the tax return to note that you qualify for head of household status based on providing over half of the upkeep of a dependent even though you do not claim the dependent on your tax return. This frequently happens in cases where one parent provides the majority of the financial support, but they agree to let the other parent claim the child on their tax return. 

What is my filing status if my spouse dies during the tax year?

You may file as married jointly or separately. You will note on the return that your spouse died during the year. If you file separately, your late spouse will also need to file a return as married filing separately – unless they are exempt from filing, but that's unlikely as the minimum income threshold for this filing status is $5. 

Does my filing status affect my eligibility for tax credits?

Yes, certain credits such as the earned income tax credit are based on your income in relation to whether you file as single or married. Note that head of household and qualifying widower fall under the single category for this purpose.

Additionally, the IRS bans most married taxpayers who file separately from claiming certain credits – but there are a few exceptions for taxpayers who have lived apart for at least six months, maintained separate finances, and have a formal separation order. 

Can the IRS Change Your Filing Status?

Yes, if the IRS reviews your return and finds an incorrect filing status, they may adjust your return and send you a notice. Typically, the IRS sends Notice CP2000 if it makes changes to tax returns, and it sends Notice CP75 about adjustments to tax credits. 

What Can You Do If You Filed Under the Wrong Status?

If you filed with the wrong status, amend your return by filing Form 1040-X. You have up to three years to adjust returns to claim refunds. Often, however, this isn't even necessary – if you simply made an error, the IRS will catch the error and adjust the return for you. 

Remember, however, that if you're married, you cannot amend a jointly filed return to a single-filed return after the deadline. If you need help dealing with an unexpected tax liability from a jointly filed return, you should look into the IRS's innocent spouse program. If you used the wrong filing status in a willful attempt to defraud the government and reduce your tax liability, talk with a tax attorney about the IRS's Criminal Investigation Voluntary Disclosure. 

Get Help With Tax Problems

The wrong filing status can expose you to unwanted tax liabilities and other consequences including interest and penalties. On the flip side, if the IRS adjusts your filing status incorrectly, you may lose out on valuable credits. To get help with tax problems, use TaxCure to connect with a high-quality tax professional today. Here's how to use this site to find help.