Filing status is the category a taxpayer files under, and it has to be settled before almost anything else on the return can be. You must determine your filing status before you can determine whether you must file a tax return, your standard deduction, and your tax, and you also use filing status to determine whether you are eligible to claim certain other deductions and credits (IRS, Publication 501).
There are five: single, married filing jointly, married filing separately, head of household, and qualifying surviving spouse. If more than one filing status applies to you, choose the one that will give you the lowest tax (IRS, Publication 501).
That last sentence is the whole planning question in a line. More than one status can be available on the same facts, and nothing makes the taxpayer take the first one that fits.
The Five, and Where Each Sits in the Code
The statute organises them by which rate schedule applies rather than by name, and the headings do the work.
Section 1 imposes tax on married individuals filing joint returns and surviving spouses under subsection (a), on heads of households under subsection (b), on unmarried individuals other than surviving spouses and heads of households under subsection (c), and on married individuals filing separate returns under subsection (d) (26 U.S.C. 1). That is four schedules for five statuses, because joint filers and qualifying surviving spouses share one.
Two of the five carry their own definitions a section later. Surviving spouse is defined at section 2(a) and head of household at section 2(b) (26 U.S.C. 2), and the joint return itself is made under section 6013, which subsection 1(a)(1) names directly (26 U.S.C. 1(a)(1)).
Do not read the dollar figures printed inside section 1 as this year’s brackets. The section carries a subsection of its own headed phaseout of marriage penalty in 15-percent bracket and adjustments in tax tables so that inflation will not result in tax increases (26 U.S.C. 1(f)), and what the schedules look like once those adjustments run is worked through in the marriage penalty. The deduction amounts attached to each status are in the standard deduction.
Marital Status Is the Gate
Every one of the five turns on whether the taxpayer is married, so that question is answered first and answered on one date.
The determination of whether an individual is married shall be made as of the close of his taxable year, except that if his spouse dies during his taxable year the determination shall be made as of the time of such death. An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married (26 U.S.C. 7703(a)).
In the publication’s terms, you are considered unmarried for the whole year if, on the last day of your tax year, you are either unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and state law governs whether you are married or legally separated under such a decree (IRS, Publication 501).
You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of four tests: you are married and living together; you are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began; you are married and living apart but not legally separated under a decree of divorce or separate maintenance; or you are separated under an interlocutory, meaning not final, decree of divorce (IRS, Publication 501).
Which Relationships Count as Marriage
A marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state or territory of the United States in which the marriage is entered into, regardless of legal residence. Two individuals who enter into a relationship denominated as marriage under the laws of a foreign jurisdiction or an American Indian tribe are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state or territory of the United States, regardless of legal residence. Individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not denominated as a marriage under the law of the state or territory where it was entered into are not lawfully married for federal tax purposes, regardless of legal residence (IRS, Publication 501).
Two Edge Cases the Publication Names
An annulment reaches backwards. If you obtain a court decree of annulment holding that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years, and amended returns on Form 1040-X claiming single or head of household status are filed for all affected tax years not closed by the statute of limitations (IRS, Publication 501).
A divorce taken for the status alone does not work. If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do in fact remarry each other in the next tax year, you and your spouse must file as married individuals in both years (IRS, Publication 501).
Married and Living Apart
There is a route out of married status short of a decree, and it has three conditions that all have to hold.
An individual who is married and who files a separate return is not considered as married if that individual maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a child with respect to whom the individual is entitled to a deduction for the taxable year under section 151, or would be so entitled but for section 152(e), if that individual furnishes over one-half of the cost of maintaining the household during the taxable year, and if during the last 6 months of the taxable year the individual’s spouse is not a member of the household (26 U.S.C. 7703(b)). Section 2 then imports that answer: an individual shall be treated as not married at the close of the taxable year if that individual is so treated under section 7703(b) (26 U.S.C. 2(c)).
The practical effect is head of household instead of married filing separately. If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated, and the head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions (IRS, Publication 501).
The Statuses Are Ordered, Not Parallel
Head of household is defined negatively before it is defined positively. An individual shall be considered a head of a household if, and only if, such individual is not married at the close of his taxable year, is not a surviving spouse as defined in subsection (a), and either meets one of the household maintenance tests that follow (26 U.S.C. 2(b)(1)).
So surviving spouse status is tested before head of household rather than alongside it, and the two are a sequence. The two-year window, the child condition and the point by point comparison between them are set out in qualifying surviving spouse.
Single sits at the bottom of the order. Your filing status is single if you are considered unmarried and you do not qualify for another filing status (IRS, Publication 501). It is the residual, which is why a taxpayer who files single without testing head of household has skipped a step rather than made a choice.
What Married Filing Separately Costs
The fifth status is the one taxpayers pick without pricing, so the publication lists what it does.
If you choose married filing separately, your tax rate is generally higher than on a joint return; your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return; you cannot take the credit for child and dependent care expenses in most cases, and the amount excludable under an employer’s dependent care assistance program is limited to $2,500 instead of $5,000 on a joint return, though a taxpayer who is legally separated or living apart from a spouse may be able to file separately and still take that credit; you cannot take the earned income credit unless you have a qualifying child and meet certain other requirements, and separate rules allow a separated spouse to claim it in certain circumstances; you cannot take the exclusion or credit for adoption expenses in most cases; you cannot take the education credits or the deduction for student loan interest; and you cannot exclude interest income from qualified US savings bonds used for higher education expenses (IRS, Publication 501).
Living together adds two more. If you lived with your spouse at any time during the tax year you cannot claim the credit for the elderly or the disabled, and you must include in income a greater percentage, up to 85 percent, of any social security or equivalent railroad retirement benefits you received (IRS, Publication 501).
Three more items are halved rather than lost. The child tax credit and the credit for other dependents and the retirement savings contributions credit are reduced at income levels half those for a joint return; the capital loss deduction limit is $1,500 instead of $3,000; and if your spouse itemizes deductions you cannot claim the standard deduction at all, while if you can claim it your basic standard deduction is half the amount allowed on a joint return (IRS, Publication 501).
The publication’s own advice is to price it. Unless you are required to file separately, you should figure your tax both ways, on a joint return and on separate returns, and when figuring the combined tax of a married couple you may want to consider state taxes as well as federal taxes (IRS, Publication 501).
Common Questions
Single, married filing jointly, married filing separately, head of household and qualifying surviving spouse (IRS, Publication 501). Four rate schedules serve those five, because joint filers and qualifying surviving spouses are charged under the same subsection (26 U.S.C. 1(a)).
By marital status on one date, then by the order the statute puts the statuses in. Marital status is determined as of the close of the taxable year, or as of the date of death where a spouse died during the year (26 U.S.C. 7703(a)). Head of household is then available only to someone who is not married at the close of the year and is not a surviving spouse (26 U.S.C. 2(b)(1)), and single is what is left when nothing else fits (IRS, Publication 501).
The year of death is still a married year. If your spouse died during the year, you are considered married for the whole year for filing status purposes, and if you did not remarry before the end of the tax year you can file a joint return for yourself and your deceased spouse. If you did remarry before the end of the tax year, you file a joint return with the new spouse and the deceased spouse’s filing status for that year is married filing separately (IRS, Publication 501).
Effectively yes. If you and your spouse do not agree to file a joint return, you must use married filing separately unless you qualify for head of household status (IRS, Publication 501). The reason it works that way is the signature rule: for a return to be considered a joint return, both spouses must generally sign the return (IRS, Publication 501), so one spouse’s refusal settles the question for the other.
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