Federal Income Tax

Which filing status is advantageous?

Which filing status is the most advantageous? There are five different filing statuses a taxpayer can file taxes as. These are, married filing jointly or separately, head of household, single, and qualifying widow(er).

Table of Contents

  1. Married Filing Jointly Advantages
  2. Qualifying Widow(er) Requirements and Advantages
  3. Requirements for Filing as Head of Household and Advantages
  4. Married Filing Separately Advantages
  5. Conclusion

If you’re single and never been married, you can only file taxes as single. However, if you have a qualifying dependent or child, you are able to claim as head of household. Those who qualify to file taxes as head of household should do so to take advantage of the lower tax rate and a higher standard deduction.

The married individuals are better off filing taxes jointly even if one or the other earns significantly more. Do you or your spouse earn significantly more? Consider filing jointly to pay less tax so the money doesn’t melt away with the high tax bracket the higher earned is subject to.

Although filing jointly is going to protect the lower-income earner, the overall taxes paid maybe more. We suggest figuring out taxes both ways accounting how everything would be if you were to file separately and jointly to see which one works the best.

Advantages of Filing Jointly

Other than a lower tax rate, under the current tax code of the United States, some of the deductions and tax credits are only available to joint filers. For example, the deduction for the IRA contributions threshold is just $10,000 for married filing separately which is funny.

You get to reduce taxable income more by claiming deductions that are pretty much only available to joint filers. This ultimately results in paying less tax and keeping more of your money. Besides filing jointly means you will pay less if filing electronically or less paperwork. It is a lot more convenient to do two persons’ job at once than doing it separately.

Who is a Qualifying Widow(er)?

The qualifying widow(er)s get to keep their married filing jointly status for two years after the spouse’s death. This grants taxpayers who are eligible to claim taxes as a qualifying widow(er) a lower tax rate and the married filing jointly standard deduction. Given the standard deduction is expected to be increased to $25,200 for joint filers, those who qualify as a qualifying widow(er) will pay less tax than they would if were to file as single or head of household.

The bottom line here is you can file taxes as a qualifying widow(er) after two years of your spouse’s death.

Who can file taxes as Head of Household and Advantages

To qualify for filing taxes as head of household, you need to have a qualifying child or dependent. So if you had a divorce and now live with your child or have a dependent that lives with you, there shouldn’t be anything in your way to filing taxes as head of household.

One thing to keep in mind is you must not be married. Also, custodial parents are most likely to be eligible to file taxes as head of household. As long as the taxpayer is single and has a qualifying child or a dependent, he or she can file taxes as head of household.

As for the advantages of filing taxes as head of household, you get to have an increased standard deduction and a lower tax rate. Here is a comparison of the current first three tax brackets for singles and head of household.

Head of Household

Tax RateIncome Between
10%$0 – $13,850
12%$13,851 – $52,850
22%$52,851 – $84,200
2020 Head of Household First Three Tax Brackets

Single

Tax RateIncome Between
10%$0 – $9,700
12%$9,701 – $39,475
22%$39,476 – $84,200
2020 Single First Three Tax Brackets

With the projected $19,000 standard deduction for head of household, filing taxes as single shouldn’t be your aim if you qualify.

Advantages of Filing Separately

There are limited advantages to filing taxes separately. The situations where you may want to file taxes separately include having a large amount of out-of-pocket expenses. As far as the current tax law is concerned, this is the only visible advantage.

The best example we can give to this is the qualifying medical expenses deduction. Since the unreimbursed expenses must exceed 10% of AGI in order for the taxpayer to claim it, the deduction becomes narrower as the income is added up. So if you have more out-of-pocket expenses than your spouse or vice versa, you may want to file separately to claim a higher tax deduction.

Conclusion of Filing Status and Taxes

The bottom line here is that the taxpayers should see it for themselves to find out which filing status is best for them. This only goes for those who are married. If you’re single and qualify to file taxes as head of household— filing as single would be a big mistake. The same also applies to qualifying widow(er)s.

If you’re eligible to file taxes as head of household while being single, do it to pay less tax. If you’re eligible to file taxes as a qualifying widow(er), do so to pay less tax. This is as simple as it goes between filing as single and head of household/qualifying widow(er).

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