Before you start preparing your tax return for the year, it's a good idea to decide which filing status you'll be using. There are five different options to choose from, and picking the right one may save you thousands of dollars on your final tax bill. Here are your options and the basic qualifications to claim each tax filing status.
Married filing jointly
If you're legally married, you and your spouse can choose to file a joint tax return for the year. The IRS considers you married if, on the last day of the tax year (meaning the year for which you're filing the tax return) you and your spouse are one of the following:
Married and living together;
Living together in a common-law marriage (by the laws of the state you're currently living in or the state where your common-law marriage began);
Married and living apart, but not legally separated; or
Separated under an interlocutory decree of divorce (but not a final decree).
If your spouse died during the tax year, you can still file your return using the married filing jointly status. In subsequent years, you may be able to file your taxes as a qualified widow(er) (see below for more on the benefits of this filing status).
When you file a joint return, you and your spouse both include all your income and deductible expenses on a single tax return. You can file jointly even if one of you had no income and no expenses. Joint returns get a double standard deduction compared to single filers, so for joint filers it often makes more sense to claim the standard deduction rather than itemizing your deductions.
Married filing separately
Most married taxpayers find that filing jointly results in a lower tax bill. However, in certain cases, filing separately may actually get you a better deal from the IRS. There may also be circumstances that make it impossible to file jointly even if you're married. For example, if you and your spouse are separated and your spouse refuses to do a joint return with you, you'll need to file separately.
The married filing separately status has some special rules that reduce many of the deductions and credits you could otherwise claim. For example, you won't be able to claim the Earned Income Credit if you use this filing status, even if you otherwise qualify for the credit. Also, if your spouse itemizes deductions on his return, you'll be required to itemize as well (whether or not you have enough itemized deductions to exceed the standard deduction).
For two years after the year in which your spouse died, you may be eligible to use the qualifying widow(er) filing status. For example, if your spouse died in 2017, you would use the married filing jointly status for the 2017 tax return, then might qualify to file as a qualifying widow(er) for the 2018 and 2019 tax years.
To claim this filing status, you need to meet all the following requirements:
You were eligible to file a joint return with your deceased spouse for the year they died (whether or not you actually did file jointly);
You didn't remarry before the end of the year for which you're filing the return;
You have a child or stepchild you're eligible to claim as a dependent who lived in your home all year (if you can't claim this child because their income was greater than $4,050, they filed a joint return, or you could be claimed as a dependent on someone else's return, you can still qualify for this filing status); and
You paid more than half the cost of keeping up a home for the tax year in question.
Using the qualifying widow(er) filing status means you get the same oversized standard deduction and tax brackets that joint filers get. Thus, if you're eligible to file as a qualifying widow(er), you should probably go for it.
Head of household
The head of household filing status is intended for single taxpayers with one or more dependents. To be specific, you can use this filing status if you meet all the following requirements:
You're not married on the last day of the tax year;
You paid more than half the cost of keeping up a home for the tax year in question; and
A qualifying person lived with you for more than half the year (there are two exceptions to this particular requirement: if your qualifying person is a parent, they may live elsewhere and still allow you to claim this filing status; also, it's all right for the dependent to be away at school during the tax year).
The "qualifying person" has to be a relative, which by IRS standards means they must be your parent, grandparent, descendant, sibling, or descendant of a sibling (i.e. your nephew). You also have to be eligible to claim that person's exemption on your tax return.
If you're married but your spouse didn't live in your home during the last six months of the tax year, and you otherwise qualify to use the head of household filing status, you can go ahead and file as head of household instead of married filing separately. Since the head of household filing status gives you access to a more generous standard deduction and tax bracket setup than a single or married filing separately filer gets, it's probably your best option in that particular scenario.
Other than not being married, there are no requirements to claim the single filing status. Single filers get the smallest standard deduction and lowest income thresholds for their tax brackets; however, at least they're not subject to the special limitations that affect married filing separately taxpayers.
Most taxpayers who qualify for married filing jointly, head of household, or qualifying widow(er) filing status will want to choose that option. These three filing statuses come with perks that can substantially reduce your tax bill. However, if you're limited to the married filing separately or single filing status, don't despair -- there are still plenty of nice tax breaks for you to claim.