How to Determine Which Filing Status is More Beneficial

Unfortunately, most people cannot choose their tax status when it comes to filing taxes. Your status is determined by your current set of life circumstances and your income. If you are unmarried without children, you must file as single. If you are a single parent, you can claim yourself as head of household. Only married couples have a choice as they are able to either file jointly or separate.TaxesFilingStatus

Single

Being single typically carries the most tax liability as you cannot claim the same credits or deductions that many of your tax counterparts claim. As your income increases, portions of it will be taxable under a progressive tax system, increasing the amount you owe as you progress in your career.

Head of Household

A single parent has the benefit of claiming dependents on his or her tax form, as well as certain deductions and credits which can significantly reduce their tax burden. However, a head of household is subject to the same progressive tax system as someone who is classified as single.

Married

Those who are married can file their taxes either jointly or separately, but this choice is largely dependent on which status will benefit them the most. There are some situations in which it is actually more beneficial for each married partner to file separately.

Widower

If you lost your spouse within the past two years, you can still file jointly for this year’s taxes and take advantage of the benefits which married couples may receive.

Discovering how to reduce your tax liability is the best way you benefit from your filing status.

Image credit: Wellness GM

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