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How to Know Which Filing Status to Use This Tax Season

by | 02-22-2020 | file tax

Your filing status determines the type of annual tax return you are to use when filing your taxes. The IRS offers five different tax filing status options: Married Filing Jointly (MFJ), Married Filing Separately (MFS), Single, Head of Household, or qualifying widow/widower with dependent.

filing status

Your filing status greatly depends on your marital status and dependents.

Your tax filing status is used to determine your standard deduction, filing requirements, and your correct tax rate. It can also have an effect on the types and numbers of deductions, credits, and exemptions that you can claim. Using the right filing status is important because it affects your tax liability or the amount you may get back.

Married Filing Jointly (MFJ)

Provided you were legally married on the last day of the tax year, you are allowed to file married. You can choose to file jointly or separately. When filing joint married, you get to combine your incomes, exemptions, and deductions on the same tax return.

Filing MFJ usually gives you the most tax savings. To be eligible to claim this filing status you must be married and living together or be married and not living together but not legally separated under a divorce decree or separation maintenance agreement.

The following tax rate table is in effect for those who are married and will file a joint married tax return in 2020 for the tax year 2019.
• 37% for all MFJ income of $612,351 and above;
• 35% for all MFJ income exceeding $408,201;
• 32% for all MFJ income exceeding $321,451;
• 24% for all MFJ income exceeding $168,401;
• 22% for all MFJ income exceeding $78,951;
• 12% for all MFJ income exceeding $19,401 and
• 10% for all MFJ income of $19,400 or less.

Married Filing Separately (MFS)

This filing status is used by married taxpayers who want to record their tax information on separate tax returns. A married couple does not have to be going through a divorce or be separated to claim MFS. Most couples do not choose this option, because they won’t qualify for certain tax credits and can’t take certain deductions.

For liability reasons, some couples choose to file MFS. When filing a joint married tax return, both parties are responsible for everything that is and is not on the tax return. Plus, if they get audited, they are both required to supply the IRS agent with all necessary documentation.

The following tax rate table is in effect for those who are married but file separate tax returns in 2020 for the tax year 2019.
• 37% for all MFS income of $306,751 and above;
• 35% for all MFS income exceeding $204,101;
• 32% for all MFS income exceeding $160,726;
• 24% for all MFS income exceeding $84,201;
• 22% for all MFS income exceeding $39.476;
• 12% for all MFS income exceeding $9,701; and
• 10% for all MFS income $9,700 or less.

Single

filing status

Being single can affect your filing status.

To claim this filing status, you must have had a spouse that passed away either last tax year or the tax year before that. You must not have been remarried during the tax year in order to qualify for this filing status. Also, you must have a qualifying dependent child and you must have paid for over half of the cost of keeping up the household for the qualifying dependent child.

The following tax rate table is in effect for those who qualify to be QW in 2020 for the tax year 2019. (The rates are the same as that of MFJ).

• 37% for all QW income of $612,351 and above;
• 35% for all QW income exceeding $408,201;
• 32% for all QW income exceeding $321,451;
• 24% for all QW income exceeding $168,401;
• 22% for all QW income exceeding $78,951;
• 12% for all QW income exceeding $19,401 and
• 10% for all QW income of $19,400 or less.

Conclusion

Choose the filing status that will yield you the best outcome. If you are married and unsure as to how to file, calculate your taxes both ways (joint and separate). Using the correct filing status is important, so make sure you understand the requirements of each one.

Not sure how to file? The IRS has an interactive tool that helps you determine what your tax status is. It only takes 5 minutes to use the tool, so if you are still confused as to how you should file, you should try it. It’s very easy to use.

For more information on filing your taxes in 2020, check out this article:
File Taxes in 2020: What to Know