Why You Should be Considering Next Year's Filing Status Now

Filing your tax return often involves recording and entering a lot of information about your life and your earnings. If you’re someone who dreads sitting down and getting it all done, you might benefit from shifting your mindset.

Instead of thinking of tax time as a few months out of the year, consider viewing your taxes as a part of your finances that can evolve and change at any time. One such area that’s often subject to change, is your filing status.

It’s important to familiarize yourself with your filing status and the tax implications associated with each.

Understanding Your Filing Status

Your filing status can change throughout the year for a number of reasons. Generally, your filing status will be determined by whether you are single or married as of December 31 of the tax year for which you are filing. Depending on your filing status, you will file accordingly for the entire year regardless of when your actual status changed.

There are several common filing statuses for taxpayers, including:

  • Single - This status applies to you if you are unmarried, legally separated, or divorced.

  • Married Filing Jointly - If married, this status applies to you if you are filing a joint tax return with their spouse.

  • Married Filing Separately - If married, you also have the option to file separately from your spouse. This is especially beneficial if it results in less tax owed.

  • Head of Household - This filing status applies to you if you are unmarried and are responsible for paying over half the costs of maintaining your home occupied by a qualifying person. 

  • Qualifying Widower with Dependent Child - If you’ve lost a spouse within the last two years and have at least one dependent, this status can be used in place of married filing jointly.

The different filing statuses carry different tax implications that could affect whether or not you’re required to file a federal tax return or if you need to file for a refund. Your filing status also determines your standard deduction amount, your eligibility for tax credits, and how much tax you owe to federal and state agencies.

Choosing Your Filing Status

Knowing your filing status gets tricky when more than one filing status can apply to a single taxpayer, meaning that you can choose which filing status you claim. Because there are different tax implications associated with each status, it’s in your best interest as a taxpayer to familiarize yourself with the most beneficial filing status for your particular situation.

If you’re curious about what filing status you should choose, you can take advantage of the IRS’s free filing status interview on their website. The quick form will help you determine your applicable filing status, but will not advise you regarding the benefits of filing under that status.

For advice or guidance in choosing your filing status, reach out to a tax professional or CPA. They can help you choose the filing status that affords you with the lowest amount of tax and help you apply credits when eligible.