I am married, should we file jointly or separately?
Your selection of filing status could have a significant impact on how much you will pay in taxes. Even further, selecting a status you do not qualify for could raise red flags and lead to an audit. As such, it is important that you review the five options for filing status. If you qualify for more than one status, you will need to closely weigh which status is the best for you. Our San Francisco audit defense lawyers explore the filing status options and how you can pick a status below.
Your Filling Options
When filing your tax return, the IRS allows you to select from five different filing statuses. These include:
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Widow or Widower
At times, your choice of status will be easy because you will only qualify for one status. For instance, generally, those who are unmarried and without dependents will need to select the status of single. Divorcees can file as single if the divorce is finalized by December 31. Those that meet the description of more than one status will need to consider which status will result in the lowest tax rate.
Electing to File Jointly or Separately If You Are Wed
Married couples have a choice when it comes to filing. They may elect to either file separate or joint tax returns. Most couples choose to file jointly because joint filings often offer the most tax breaks. However, there are several reasons why a married couple may wish to file separately. For instance, if one spouse has a hefty expense, such as medical expenses, filing separately may increase their deduction. By filing separately, the spouse with the medical expenses can take a bigger tax deduction because solely their income will be reported on the return.
Seeking Head of Household If You Are Unmarried with Dependents
Individuals who are not married, but do have minor children, will usually benefit more by filing as head of household, as opposed to single. Head of household comes with higher deductions and lower tax rates, but not every parent will qualify. You will need to pay over half the cost of maintaining your home and have a dependent that lives with you for over half the year. If you are uncertain as to which filing status to select or if you find yourself in the midst of an audit that requires you to verify your status, contact a San Francisco tax attorney right away.