Every year taxpayers that experience marital change, during the year, are confused about their proper filing status. The Internal Revenue Code (IRC) provides guidance on the qualifications of each of the individual taxpayer filing statuses.
Confusion arises when there has been a marriage or divorce during the tax year. Dependents are no longer allowed as a personal exemption but are utilized for certain credits of the tax code. Who is a dependent for tax filing purposes? What status do I use if my spouse dies during the tax year? How long can I claim a certain filing status? To say the IRC is complex is to say the Mona Lisa is simply another painting!
The basic guidelines for filing status for an unmarried individual will be one of the following: Single or Head of Household. You are considered unmarried for the whole year if, on the last day of the tax year, you are either unmarried or legally separated from your spouse under a divorce decree. State law, not the IRS, governs whether you are married or legally separated under a divorce decree.
Some nuances in the IRC, and its regulations, regarding divorced taxpayers create additional challenges to those individuals attempting to avoid taxation through the legal means of divorce. For example, if you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to remarry and do so in the next tax year, you and your spouse must file as married individuals for both tax years.
If you are considered unmarried on the last day of the year, paid more than half the cost of maintaining a home and a qualified child lived with you more than half of the tax year, you may file as Head of Household. This filing status will allow a greater standard deduction than that available to an unmarried taxpayer.
Life sometimes creates difficulty for us. For example, if you were married for only one day of the tax year and your spouse dies, you may continue to file as a Married Filing Joint taxpayer for the year. Further, if your spouse dies in 2019, you may file as a joint tax filer for 2019 and use qualified widow(er) status for the succeeding two years. To claim qualified widow(er) filing status you must have a dependent, child or stepchild, you can claim during the tax year.
Don’t allow life to cause you confusion and distress. Seek out a Certified Financial Planner™ practitioner and CPA that can help guide you through the maze of laws and regulations. You will be glad you did!