Your tax filing status has a measurable impact on the amount of taxes you pay, and a pending or completed divorce complicates your filing. The Internal Revenue Service has rules that govern tax status when the taxpayer is experiencing a martial status change. Knowing what status applies to your situation helps you avoid costly tax mistakes.
What Determines My Tax Status?
Your tax status is determined by what your legal marriage status was on the last day of the tax year, per the IRS. If you are in the midst of divorce proceedings on the last day of the tax year but have not yet received a final divorce decree and no legal separation agreement is in place, you are still considered married for that tax year. However, if you are legally separated on the last day of the year by separation agreement that was entered in court records, you are considered unmarried by the IRS. Your divorce or legal separation must be recognized under state law in order for the status to be valid with the IRS. In both cases, in order to be considered unmarried by the IRS, you must be living apart from your spouse.
Can I Use Head of Household?
Head of Household is a filing status that lowers your taxes more than the Single or Married Filing Separately status. You may be able to use the Head of Household status if you meet the IRS requirements. You must be considered unmarried by the IRS, such as if you are divorced or have a legal separation agreement, you paid more than half of the expenses of your home's upkeep, and you had a dependent living with you for more than half the year. Generally, if you were granted custody of your children in the divorce, the child is your dependent unless you agreed to let the other parent claim the children in the separation agreement or as shown on your divorce decree, per the IRS.
Do I File As Single?
You must file as "single" if you are considered unmarried by the IRS due to a finalized divorce or separation agreement if you do not have any qualifying dependents. If you are in the middle of divorce proceedings without a legal separation agreement or have just started the divorce process, you need to file using a married status. Married Filing Jointly is used if you are filing taxes with your spouse, and Married Filing Separately is used if you are filing taxes without your spouse. The tax benefit to married (filing jointly) depends on the variables of your individual tax returns, such as how much you and your spouse make.
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