The filing status is important because an individual's tax bracket (and, therefore, the amount they must pay) is determined by marital status, the number of children, occupation, and several other factors. There are five types of filing status: Single, Head of Household, Married Filing Jointly, Married Filing Separately, and Qualifying Widow(er).
Single Taxpayers
If you are unmarried or considered unmarried by the IRS (which includes widows and widowers), then you will file as a single taxpayer. This is the simplest filing status, and it usually results in the highest tax bill. However, there are some benefits to being a single filer, such as being able to claim the Standard Deduction without having to itemize deductions.
Head of Household Taxpayers
If you are unmarried but have a dependent child, you may be able to file as head of household. This filing status comes with a number of benefits, including a lower tax rate and a higher standard deduction. To qualify as head of household, you must have paid for more than half of the cost of maintaining your home for the year. Additionally, your dependent child must have lived with you for more than half the year (with some exceptions).
Married Taxpayers (Filing Jointly)
If you are married and both spouses agree to file a joint return, you will file as married taxpayers filing jointly. This is often the best filing status for couples because it results in a lower tax bill than if each spouse filed separately. Additionally, married taxpayers who file jointly can take advantage of certain tax breaks that are not available to those who file separately.
Married Filing Separately
You can use this filing status even if you did not live apart from your spouse at any time during the tax year. If you choose this filing status, each spouse must figure his or her own tax separately using his or her own income and deductions. But there are some items—such as social security benefits and certain itemized deductions—that may not be fully available to taxpayers who use this filing status.
Qualifying Widow(er)
You can use this filing status if your spouse died at any time during either of the two years preceding the tax year and you have not remarried before the end of the tax year; AND you paid over half the cost of maintaining as your home for yourself and a dependent child for more than half of 2016; OR had a dependent child living with you in 2016 for more than half a year; AND did not remarry before 2017; AND do not qualify to use head-of-household filing status for 2017. For purposes of this test period "spouse" includes an individual who would have been your spouse except that your marriage ended by divorce before 2016.
When determining which filing status to use when preparing taxes it is important to understand that each option has different qualifications that must be met in order to file under that specific category. It is also important to understand that each filing status has different implications such as how much taxes will be paid or what type of deductions can be taken advantage of. Therefore it is essential that taxpayers educate themselves on all available options in order to make sure they are taking full advantage of their rights come tax season!