“What tax filing status should I use?” was probably the #2 most frequent question I answered this year. And it was mostly asked by women!  Simply put, our lives are more complicated, and we may qualify for more than one status. As a friendly reminder, you are more than capable of doing your own taxes. For free.

Go forth and conquer! 

How Do Filing Statuses Work?

Your tax filing status depends on two things:

  1. Your marital status
  2. Whether or not you have dependents 

Since women are more likely to be custodial single parents or support an aging parent, “Single,” “Head of Household” and “Married, Filing Separately” may all apply. (Also, Married Filing Jointly, but that one is obvious, so I’m not going to cover it).

Whatever tax software you use usually makes your filing status easy. Still, it might not judge your particular situation perfectly, so at the bottom of this post is a screenshot of the IRS Form 4012 (aka the Holy Grail for 75% of tax questions) to help you confirm. Let’s dive in. 

Tax Filing Status: Single?

Filing as a single woman means you’re unmarried and have no children or other dependents. In this scenario, you might be:

  • Never married
  • Legally divorced 

My toddler’s favorite baby sign language is for “All Done” – that is what your divorce needs to be **as far as your state is concerned** to file separately. Divorce and separate maintenance decrees differ from state, and the IRS follows the state in defining it. So check with your state – a few have weird divorce laws.

Fun fact, from a tax perspective you are “Single” even if you are still cohabitating with an Ex. The IRS cares about your legal status, and considers a cohabitating Ex about like a roommate. Except waaaaaay less fun.

For 2020, the standard deduction for filing as a single person is $12,400. Next year, it goes up to $12,550. Unless you are a homeowner or have major medical expenses, the standard deduction is probably fine, but definitely double check as you prepare your taxes. 

“Head of Household” a.k.a. Single Mom’s Club

When you file as Head of Household, it means you’re not married, but have dependents – whether they’re your kids or other relatives. I love this filing status.

Head of Household is the IRS’s way of counting a single parent as a person and a half. 

Single or custodial parents are likely raising a family on a single income, very possibly without financial help. To acknowledge how hard that is financially, they increase the standard deduction by ~50%. So you get taxed on ~$6000 less of your income.

One great thing about this filing status is you don’t necessarily have to be a mother. Your dependents are maybe a qualifying relative, or even a qualifying parent. This might apply to you if:

  • You’re single as of December 31 of the previous year
  • You pay more than half the household expenses
  • Your dependent lives with you for more than half the year
  • Your aging parent does not live with you, but you provide more than half their support 

If you’re still in the divorce process and don’t want to file jointly with your spouse, you are still considered Head of Household if you lived apart for six months of the year and agree to file separately.

Another convenient aspect of Head of Household is if you have children over 18, you can still claim them as an exemption if they’re a full-time student or disabled.

The “It’s Complicated” Tax Filing Status – Married Filing Separately

I would like to buy a margarita for anyone filling as “Married Filing Separately” or MFS, because one of two things is happening:

  1. You are paying off a lot of debt
  2. You are in mid-divorce

Girl, in either case, you deserve a marg. 

The IRS knows intimately how complicated peoples lives can get – “separated but still working out your divorce settlement” is a status you can live in for years. “Separated, but we still keep our finances together for legal reasons” is another legit reason to use this filing status.

Here is the one thing to remember: the other party has to agree to the status. 

Technically, you don’t have to have agreement, but if, for instance, you file MFS and they submit using any other tax filing status, their return will be rejected. And vice versa. So coordinate early to avoid headaches. I’m really, really sorry you still have the overhead of this relationship in your life. 

When Does Married Filing Separately Make Sense?

Here are two scenarios where I have seen people who are happily married with intermingled finances use the separate tax filing status:

  • Income-based debt repayment (usually a student loan). Filing separately gives you a tax return with *only* your income on it. If your spouse earns a lot more, you can file separately and qualify for better income-sensitive repayment plans using just your info. 
  • Separation. It can take years for some divorces to finalize, and the the status for people in limbo. Also, some people chose to stay separated rather than divorce for a wide range of reasons, from financial complications (you will know if this is you, generally its a pension or rare benefits) to religion. Married filing separately is how you tell the IRS that yes, you’re still married by their definition, but your finances are separate. 

These are both neat tricks, but as ever proceed with caution – don’t get creative with your deductions. Pro tip. 

Tax Filing Status Decision Tree – IRS Form 4012

tax filing status decision tree - IRS form 4012

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