VITA

Training

101

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Filing Status

Filing

Status

1

VITA / TCE

Training

101

Section B

Lesson 2

You must ask questions

Never assume you know the status, it’s very easy to get it wrong.

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Start by finding out what their marital status was on December 31st of the tax year-NOT their marital status when they are sitting in front of you--it could have changed.

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Example:

“Were you legally married on December 31ˢᵗ?”

“Were you legally divorced on December 31st?

“Have you ever been legally married?”

These can will give you a starting point.

• Single
• Married Filing Joint
• Married Filing Separate
• Head of Household
• Qualifying Surviving Spouse (QSS) with dependent children

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The 5 Filing Statuses:

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Were they

legally married on December 31ˢᵗ?

That will give you a starting point.

On the last day of the year taxpayer is:

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• Not legally married anywhere in the world

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• Or is legally separated* (court order, not a restraining order--that is different)

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• Or is legally divorced

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• Or is widowed before January 1st of the tax year and does not have dependent children.

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Note: Florida does not do legal separations

Filing Status: Single If…

On the last day of the tax year they are legally Married

• and they choose to file together
• it does not matter if they live together or not.

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Or.. they live together in a recognized common law marriage (only 9 states allow this)

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Or Spouse died during the tax year

Filing Status: Married Filing Joint If…

• Both parties AGREE to file together-combine all their income and share responsibility for the return.

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• This filing status generally the most beneficial (but not always)

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Filing Status: Married Filing Joint:

Filing Status: Married Filing Separately:

More

On the last day of the year taxpayer is:

• Legally married
• Doesn’t want to file with their spouse
• Doesn’t matter if they live together or apart

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• Each taxpayer files an individual return claiming their own income and exemptions
• They are only responsible for their own return.

Filing Status: Married Filing Separately:

More

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Some drawbacks:

• Income tax rate is generally higher
• If one spouse itemizes deductions-the other is forced to
• 85% of Social Security Income can be taxed if they lived together at any point in the year, but choose to file separately.

Filing Status: Married Filing Separately:

More

Some drawbacks continued:

Some credits unavailable or reduced

• No Earned Income Credit (EITC)*now there is an exception for some –see if they qualify. If they do qualify—you have to check the box on the demographic screen (See Lesson 16)

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• No Education Credit
• No Student Interest Deduction
• No Dependent Care Credit
• Child Tax Credit can be reduced (depends on income)

Filing Status: Married Filing Separately:

More

Drawbacks continued:

Some deductions are not allowed:

• No reduced tax on Overtime Income
• No reduced tax on Tip Income
• No Enhanced Senior Deduction

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If they have Marketplace Insurance there will be a 100% repayment of ALL Premium Tax Credits They Received (Column C Total)

Here is an example of one taxpayer’s 1095A-Column C Total

Filing Status: Married Filing Separately:

More

So why file separately?

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• Personal choice—Keep Finances separate

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• By filing separately, taxpayer will be protected from being held responsible for spouse's back taxes, fees or penalties for that year’s taxes.

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Filing Status: Married Filing Separately:

More

So why file separately? Continued

• Sometimes by filing jointly, their tax liability in higher because:
• Their combined income puts them in a higher tax bracket
• or their higher income disqualifies them from certain income based credits like the Child Tax Credit.
• I have seen a couple, when filing jointly, owe several thousand, to filing separately, and the combined results was a refund.

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Volunteer Tip- When in doubt, compare MFJ and MFS by preparing the return both ways. A few extra minutes spent testing both filing statuses could save the taxpayers money or increase their refund.

You will be their hero!

So why file separate? Continued…

Some taxpayers file separately to avoid a potential refund offset due to spouse’s outstanding debts

• Ex: Child Support & Student Loan garnishment (One spouse may lose their portion of the refund if the IRS takes it to pay the other spouse’s debt).

But, if they file separately, they might miss out on potential credits**

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Filing Status: Married Filing Separately:

**To prevent this, suggest they file Joint with Form 8379, Injured Spouse Allocation instead

Many people make mistakes with this filing status.. please make sure you review this carefully.

Filing Status: Head of Household:

A taxpayer may qualify if they pass these 3 tests:

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Test 1: Is unmarried or “considered unmarried” on last day of tax year, and

• Paid more than 50% cost of keeping up a home for the required period of time, and
• Had a qualifying person living with them more than half the year (except for temporary absences and parents—keep reading)

Filing Status: Head of Household:

Test 1 continued: Be Unmarried or “considered unmarried” on last day of tax year,

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For the IRS, to be considered unmarried, the taxpayer must not have lived with their spouse at all from July 1- Dec 31 of tax year. (not 1 night). (not a part due to work or school—but separated)

Filing Status: Head of Household:

Test 2: Have paid more than 50% of the cost of keeping up their home

Filing Status: Head of Household

See PUB 4012 Section B

Test 3: Lived with a Qualifying Child or Qualifying Relative (by blood or marriage) for more than half the tax year. (More than 6 months)

Filing Status: Head of Household

Use your tools! See who qualifies

See PUB 4012 Section B

Test 3: Lived with a Qualifying Child or Qualifying Relative (by blood or marriage) for more than half the tax year. (More than 6 months)

Filing Status: Head of Household

This filing status is designed to help the single parent paying over 50% of the cost of the home they lived in with their kids and also for a married parent who is living and raising children like a single parent for the last six months of the tax year.

Test 3 Exception to residency test.:

An unmarried taxpayer who can claim their

parent as a dependent

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and pays more than ½ the cost of the home that their parent lives in, can qualify as Head of Household

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even if they don’t live with their parent!!!

Filing Status: Head of Household

Filing Status: Head of Household

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Use your tools!

Filing Status: Head of Household

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Use your tools!

The term “qualifying child”

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and

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“qualifying relative”

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is covered in Tab C

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Filing Status: Head of Household

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Use your tools!

Read carefully:

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Even if the child is NOT claimed as a dependent,

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the child might be able to qualify the taxpayer as Head of Household.

Notice this box does NOT say they have to claim

the child as their dependent.

Filing Status: Head of Household

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Use your tools!

Example:

The court says dad can claim the child as a dependent on their taxes, but the child lives with mom more than ½ the year.

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So, Dad can claim the child as a dependent, and mom, can file Head of Household (if she qualifies) and NOT claim the child as a dependent.

Notice this box does NOT say they have to claim

the child as their dependent.

Filing Status: Head of Household

Use your tools!

Example:

The court says dad can claim the child as a dependent on their taxes, but the child lives with mom more than ½ the year.

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So, Dad can claim the child as a dependent, and mom, can file Head of Household (if she qualifies) and NOT claim the child as a dependent.

In the 1-2 years PRIOR to the tax year:

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• Client was married and spouse passed away

AND

• On the last day of the tax year had not remarried

AND

• In the tax year paid over 50% of the cost of the home

AND… keep reading…

Filing Status: Qualifying Surviving Spouse (with Qualifying Children)

Filing Status: Qualifying Surviving Spouse with Qualifying Children

Can only be used the first 2 years AFTER the year of spouse passing.

So, if the son/daughter lived with the parent

ALL YEAR

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&

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the only reason the parent cannot claim the child is the child’s income is more than $5,300

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they might qualify!

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Use your tools!

Filing Status: Qualifying Surviving Spouse with Qualifying Children

Benefits:

• This filing status helps the now “single parent” as they adjust to supporting family as a one parent/income household.

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• It allows for the same higher standard deduction as a married filing jointly couple is entitled to for 2 years after the year of passing.

Filing Status Qualifying Surviving Spouse

(With Qualifying Children)

Why Selecting the Correct Filing Status is Very Important

This shows the Standard Deduction amounts (how much money Taxpayers can earn BEFORE Income Tax is generated).

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Selecting the wrong filing status can change the results of the return.

2026 Standard Deductions for Taxpayer

(and spouse if filing jointly) that are under 65

Woo-Hoo!

You Did It!

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Up Next: Practice #2