Workflows & Systems: Essential Ways to Improve Business Efficiency – Article #12October 1, 2018
Justin Goodbread Named Exit Planning Institute’s Leader of the Year for 2018October 3, 2018
It is not unusual for your tax status to change after a major life event like marriage, divorce, and death of a spouse. Are you 100% sure you have chosen correctly among the tax filing status options? Now is a good time to double check in order to be sure you pay the correct tax amounts.
For some people using the right filing status could also help determine if you are required to file a tax return at all. Keep in mind that whatever your marital status is on Dec. 31 is the status you will utilize for the entire year.
There are also times when you may be eligible for more than one filing status. In that case, you will want to select the status that allows you to pay the least amount of taxes.
5 Tax Filing Status Options:
- Single. If you are not married, divorced, or legally separated under state law this is the option you will typically choose.
- Married Filing Jointly. Joint tax returns are for married couples. If your spouse happens to pass away during the year, you can usually still file a joint return for that year.
- Married Filing Separately. Some married couples choose to file two separate tax returns because they occasionally owe less in taxes than if they filed a joint tax return. You may want to prepare your taxes both ways to look at the final numbers before you choose. You can also use this status if each person just wants to be responsible only for their own taxes.
- Head of Household. This status applies to a taxpayer who is not married most of the time. However, there are some special rules that make it beneficial for others as well. For example, if you have paid more than half the cost of keeping up a home for you and a qualifying person, then this may be the better option for you than one of the others. Be sure you check all the rules to ensure that you qualify before using this status.
- Qualifying Widow(er) with Dependent Child. Typically, if you have a dependent child and your spouse passed away during on the previous two years, then this option may be your best choice.
While your tax filing status may not seem like a big deal, it really is. Check with your CPA or a qualified tax advisor to confirm that the option that you pick will make your life the most Financially Simple™.