Federal Tax Filing Requirements and Statuses

Status, exemptions and dependents can be a headache to figure out, but mostly worth the time in getting it right. The amount of income you can receive before you must file a tax return has increased, as it does every year, for some individuals. Refer to table 1-1 of the IRS publication 17 (Your Federal Income Tax) which can be found on the IRS website.

Let's find out how to figure out your filing status. Most of these are very obvious, but some can be a bit confusing (Imagine that, taxes confusing).

It wouldn't be taxes if it wasn't.

There are five filing statuses, all of which are explained in the publication 17. They are Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with dependent child. Sounds pretty easy for the most part, right? Pay close attention, this explanation will not be repeated.

The first of the five statuses is Single. This status means that you are not married to anyone (Hmm). No really, the meaning as defined by the pub 17 is: If, on the last day of the year, you are unmarried or legally separated from your spouse under divorce or separate maintenance decree. If you are single, under 65 and made at least $8,450 in income, you must file a return. If you are single, over 65 and made at least $9,700 in income, you must file a federal tax return.

The next status is Married Filing Jointly (MFJ). This means that you are married and you and your spouse are filing on the same form (Jointly). On a joint return, both spouses combine incomes and claim combined deductions. If both spouses are under 65 and made at least $16,900 in income, a return must filed. If both spouses are over 65 and made at least $17,900 in income, they must file a federal tax return.

Married Filing Separately can have some penalties and is just as obvious as the others. You are married however, each spouse wishes to file separate forms. Any persons MFS, of any age who made at least $3,300 in income must file a return. This filing status may benefit you if you want to be responsible for your own tax or if it results in less tax than filing together. Here is a list of special rules regarding the Married Filing Separate filing status:

1.) Your tax rate will generally be higher than on a joint return.

2.) Your exemption amount for figuring the Alternative Minimum Tax is half than what is allowed on a joint return.

3.) You cannot take the credit for child and dependent care expenses in most cases. And the amount that you can exclude from income under an employer's dependent care assistance program is limited to $2,500 as opposed to $5,000 on a joint return.

4.) You cannot claim the Earned Income Credit. This is very big for most taxpayers with dependents.

5.) You cannot take the exclusion or credit for adoption expenses in most cases.

6.) You cannot claim educations credits (Hope and Lifetime credits) or the student loan interest deduction.

7.) You cannot exclude interest income from qualified, U.S. savings bonds that you used for higher education expenses.

8.) If you lived with your spouse at any time during the tax year:

A) You cannot claim the credit for the elderly or the disabled.

B) You will have to include in your income up to 85% of any social security or equivalent railroad retirement benefits you received.

C) You cannot roll over amounts from a traditional IRA (Individual Retirement Arrangements) into a Roth IRA.

9.) The following deductions and credits are reduced at income levels that are half those for a joint return:

A) The Child Tax Credit.

B) The Retirement Savings Contributions Credit.

C) Itemized Deductions.

D) The deduction for personal exemptions.

Your capital loss deduction limit is $1,500 (instead of $3,300 on a joint return).

10.) If your spouse itemizes deductions, you cannot claim the standard deduction. If you both claim the standard deduction, you are only allowed half the amount you would on a joint return.

As you can see, MFS can be out there when it comes to filing. I always suggest that married persons filing a return prepare their taxes both ways (MFJ and MFS) to see which method they would benefit from. Also there are still other aspects of filing MFS that are listed in the pub 17 on the IRS website.

Next is the Head of Household filing status. This is the preferred status, if you are single or divorced with dependents. The income requirements for filing are: $10,850 if under 65 and $12,100 if over 65. You may be able to file as HOH if you meet any of the following requirements:

1.) You are unmarried or considered unmarried on the last day of the year.

2.) You paid more than half the costs of keeping up a home for half the year.

3.) A qualified person lived with you in the home for more than half the year (except for temporary absences, such as school). However if the qualifying person is your dependent parent, he/she does not have to live with you. See the rules for qualifying person in the pub 17 under the HOH filing status requirements.

If you qualify as head of household, your tax rate is usually lower than for single or married filing separately. The standard deduction is also higher than Single and MFS.

The last filing status is Qualifying Widow(er) with Dependent Child. You can only use married filing jointly as your status for the year that your spouse died (if you qualify for that status). You may be eligible to use QWDC for two years following the year your spouse died, providing you do not remarry. This filing status entitles you to use joint return rates and the highest standard deduction amount (if you do not itemize your deductions).