What's yours???? You don't know? Read on.....

Q: OK, what is the purpose of a filing status?

A: Each filing status is attached to a specific series of tax rates. In addition, your filing status will determine your standard deduction. So ya gotta get your filing status correct in order to use the correct tax tables and standard deduction.

Q: How many filing statuses (stati?) are there?

A: There are five: Single; Married Filing Jointly; Married Filing Separately; Head of Household; and Qualifying Widow(er).

Q: Can I file as Single if I was single at any time during the year?

A: No way! Filing status is determined as of the last day of the year. To use the Single status, you must be unmarried or separated from your spouse either by divorce or by a written separate maintenance decree.

Q: Wait a minute! My divorce was final on December 29th. I was married for the entire year except for two days. Surely, I can file as Married Filing Separately.

A: Sorry. The last day of the year is the controlling factor. On December 31st, you were a single person. If you have no dependents, your only choice is a Single status. And please don't call me Shirley.

Q: Well, Married Filing Jointly is easy. You either are or you aren't.

A: Not exactly. Taxpayers may file jointly if on the last day of the year they are:

1) married and living together as husband and wife; OR
2) married and living apart, but not legally separated under a decree of divorce or separate maintenance agreement; OR
3) separated under an interlocutory (i.e., not final) decree of divorce.

Q: My boyfriend and I have been living together for over 5 years. Can we file Married/Joint?

A: Federal law defers to state law in this case. You and your boyfriend will be able to file Married/Joint if you live together in a common law marriage that is recognized in the state where you currently reside. So you really need to check your individual state law. Some states recognize common law marriages and some don't.

Q: My girlfriend and I moved from a state which recognized our common law marriage to a state that does not recognize common law. We were filing Married/Joint in our old state. How do we file in the new state?

A: If you have relocated from a state that recognized your common law marriage, you can file Married/Joint in your new state.

Q: What is this marriage penalty that I hear about.

A: Many married couples where husband and wife both work and earn similar, moderate incomes pay higher taxes than they would if they were single. The only thing that causes the increase in tax is the fact that they are married. Hence the name "marriage penalty." And it can add up to a considerable sum.

Q: Well, if these people don't want to get hit with the marriage penalty, why don't they file Married/Separate?

A: Because the Married/Separate tax rates are exactly one-half of the Married/Joint rates, so no benefit there. In community property states, the computations become complex, and the disadvantages outweigh the advantages in most cases. In separate property states, there are many reasons to use the Separate status.

Q: How does the Separate status work? Who has to claim what income?

A: This can get very complicated. But in general, in a community property state, all income and deductions for both spouses are added together, divided in half, and each spouse reports his/her share. You can see why it would not be extremely advantageous in a community property state. But in a separate property state, each spouse reports his/her individual income and deductions. Again, this can be complicated, especially when joint accounts are maintained in a separate property state.

- Article 10

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