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by Brett Backues on December 3, 2011One of the very first questions on the individual income tax return could hold the most significant impact for the bottom line. It’s your filing status. Your status, of course, is determined by whether or not you are married and whether or not you have children. If you have children, you must identify whether or not those children are old enough to file their own tax return with the Internal Revenue Service (IRS).
Easy enough. But wait, there’s more.
If an individual is married, that person could file could file a single return with their spouse (Married Persons Filing Jointly), as the Head of the Household, or submit a totally different return (Married Filing Separately).
Got that? It may sound simple, but it’s not. Here are some perplexing issues to consider before selecting your status.
If a husband and wife elect to combine their income and file together on one return with their incomes combined, the tax liabilities are computed using a completely different rate schedule. Then again, if a married couple files separate returns, under certain situations they can amend it and file jointly, but they cannot amend a joint return and then file separately. On the other hand, a joint return may be filed even though one spouse has no income and deductions.
So far, so good.
Then there is the situation that occurs if one spouse dies during the tax year in question. The surviving spouse has the right to continue to file a joint return. Some married couples choose to file a joint return so that they qualify to use the lower tax rates that apply to the head of a household.
As a general rule, in order to be considered the head of a household the taxpayer cannot be a resident alien, must meet certain marital qualifications and have at least one child or other dependent for more than half of the calendar year.
Wow. If the first question is that tough, just think how much fun the rest of the return will be.
backEasy enough. But wait, there’s more.
If an individual is married, that person could file could file a single return with their spouse (Married Persons Filing Jointly), as the Head of the Household, or submit a totally different return (Married Filing Separately).
Got that? It may sound simple, but it’s not. Here are some perplexing issues to consider before selecting your status.
If a husband and wife elect to combine their income and file together on one return with their incomes combined, the tax liabilities are computed using a completely different rate schedule. Then again, if a married couple files separate returns, under certain situations they can amend it and file jointly, but they cannot amend a joint return and then file separately. On the other hand, a joint return may be filed even though one spouse has no income and deductions.
So far, so good.
Then there is the situation that occurs if one spouse dies during the tax year in question. The surviving spouse has the right to continue to file a joint return. Some married couples choose to file a joint return so that they qualify to use the lower tax rates that apply to the head of a household.
As a general rule, in order to be considered the head of a household the taxpayer cannot be a resident alien, must meet certain marital qualifications and have at least one child or other dependent for more than half of the calendar year.
Wow. If the first question is that tough, just think how much fun the rest of the return will be.
