Contributed by: TriciaD, FreeTaxUSA Agent
Choosing the right filing status can be overwhelming. Knowing the pros and cons of each and evaluating your personal circumstances like marriage, divorce, or relocation can help you decide. Every tax situation is unique and selecting the correct filing status can potentially save you money.
Marital status on the last day of the year (December 31st) determines your filing status, affecting tax rates, deductions, thresholds, and exemptions. In the United States, the IRS provides five filing status options.
We will discuss each option:
Single (S)
Single status is straightforward and typically applies if you don't qualify for another filing status. If you meet any of the following criteria on December 31st of the tax year, you are considered single:
- Unmarried – Either single or legally separated by divorce or decree.
- Divorced – If divorced under a final decree, you are considered unmarried for the entire year.
- Divorce and remarriage – If you divorce just to file as unmarried and plan to remarry the same spouse next year, you must file as married both years.
- Annulled marriage – A court annulment means no valid marriage existed; you are considered unmarried. Amend previous tax returns (Form 1040-X) to update your filing status.
Married filing jointly (MFJ)
Married couples must combine incomes and deductions, generally making this the most beneficial status. File jointly if any of these apply:
- Married as of December 31st, even if you didn’t live with your spouse at the year’s end.
- Spouse died during the tax year, and you didn’t remarry in the same year.
- Spouse died in the following tax year before filing the current year’s return (Example: Spouse died in 2024 before filing 2023 return).
Pros:
- Higher standard deduction, if not itemizing deductions.
- Qualification for various tax credits which may be unavailable or reduced for other filing statuses.
- Tax may be lower than your combined tax using other filing statuses.
Cons:
- Both spouses are equally responsible for the taxes owed. Even if a divorce decree states your former spouse is responsible for amounts due on previously filed joint returns.
- If one spouse has significant debts or legal issues, it could affect the joint return.
You can file MFJ even if only one spouse has income.
Married filing separately (MFS)
This option lets you keep your finances separate, especially useful if one spouse has significant debts or legal problems. Each spouse must file their own tax return. If you live in one of the nine community property states, you’ll need to file Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States, to allocate the amounts of income between you and your spouse or partner and print and mail your tax return. FreeTaxUSA does not support this form.
Pros:
- Each spouse is responsible for their own tax liability.
- If one spouse has higher expenses or deductions, the other may owe less tax than if you filed jointly.
Cons:
- Higher combined tax payments and increased tax rates.
- Ineligibility for some tax credits.
- Standard deduction reduced by half compared to joint filing.
- Reduced credits and deductions.
- If one spouse itemizes deductions the other spouse must also itemize deductions, the standard deduction can’t be used.
The following is an example of a married couple with significantly different incomes, illustrating why they might choose the "Married Filing Separately" option to optimize their tax benefits, particularly concerning medical deductions.
Emily and John are considering their filing status and the implications of filing separately versus jointly. This is mainly due to John having $15,000 in medical expenses.
Married Filing Separately:
Emily’s Adjusted Gross Income (AGI): $200,000
- 7.5% of Emily’s AGI: $15,000
John’s AGI: $30,000
- 7.5% of John’s AGI: $2,250
By filing separately, John may be able to deduct medical expenses that are more than 7.5% of his AGI, if his total deductions are larger than $14,600 and he chooses to itemize. In this case, he can deduct:
- Deductible Medical Expenses: $15,000 (total medical expenses) - $2,250 (7.5% of John’s AGI) = $12,750.
If Emily and John were to file jointly, their combined AGI would be:
- Combined AGI: $200,000 + $30,000 = $230,000
- 7.5% of Combined AGI: $17,250
In this scenario, his total medical expenses of $15,000 would not exceed the 7.5% threshold of their combined AGI ($17,250). Therefore, they would not be eligible for any medical expense deductions.
By choosing to file MFS, John can deduct a significant portion of his medical expenses, which would not be possible if they filed MFJ.
Example: Why Emily and John Might Choose "Married Filing Separately"
Head of household (HOH)
Use this status if you are unmarried or considered unmarried and pay more than half the cost of maintaining a home for a qualifying dependent. Claim this status if you meet these criteria:
- Unmarried on the last day of the year.
- Pay over half the costs of keeping a home for the year.
- A qualifying person lived with you in the home for more than half the year.
Pros:
- Lower tax rates.
- Higher standard deduction.
- Eligibility for various tax credits.
Cons:
- Must meet specific requirements to qualify.
- Determining qualifications can be complex.
- Considered unmarried for this status, but not for some credits or deductions.
Note: You can still use this status if the qualifying person is temporarily absent, like being away at school, or if they are your dependent parent who doesn’t live with you.
Example: Jane, a single mother, pays more than half the cost of maintaining a home for her child. She qualifies for HOH status, which offers a higher standard deduction and lower tax rates compared to filing single.
Qualifying surviving spouse (QSS)
You can use this status for two years after your spouse’s death if:
- You were eligible to file a joint return the year they died.
- You haven’t remarried within two years.
- You have a child/stepchild you can claim as a dependent (see exceptions).
- The child lived with you all year except for temporary absences.
Example: Your spouse died in 2022, and you haven’t remarried. During 2023 and 2024, you continued to keep up a home for you and your child who lives with you and whom you can claim as a dependent. For 2022, you were entitled to file a joint return for you and your deceased spouse. For 2023 and 2024, you can file as a QSS if you remain single.
Pros:
- Joint return tax rates.
- Highest standard deduction.
- Eligible for various tax credits.
Cons:
- Status is limited to two years following death of the spouse.
- Can’t remarry before 2nd year after death.
- Must have a qualifying dependent child.
Example: Recently Widowed
Emily's husband passed away last year, and she has a dependent child. Emily qualifies for QSS status, allowing her to use the tax rates of MFJ for the next two years.
To choose your filing status in your FreeTaxUSA account, follow this menu path: Personal > Filing Status.
Conclusion
Choosing the right filing status is important as it affects your tax liability and refunds. By knowing your options—Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Surviving Spouse—and considering your personal situation, you can make the best choice. Knowing your status ensures you navigate tax season confidently.
