Filing Status means a class that determines a type of declaration, which is used by a tax bearer during the tax submission. Notably, a filing status is closely linked to the marital one.
Essence of Filing Status
Filing status is considered a key document as it determines the rate at which income is levied. And, as it has been already mentioned, a filing status of a taxpayer usually depends on the marital position (married or not) as of December 31 – this defines his standing for the whole year.
Anyway, a taxpayer is able to claim more than one filing status. In this case, the one with the lowest tax is usually selected. In case of providing misleading information, the actions are recognized as a fraud, and a fine is set.
Types of Filing Status
According to the legislation system, there exists five filing statuses. Each submission document is reviewed below.
Single claimant. A status is usually granted to the candidates (taxpayers), who are unmarried, divorced, or living separately on the basis of legislative acts. The category also includes a common-law partner. Individuals, applying for the single filing status, possess lower contribution assessment for a majority of exemptions.
Spouses submitting filing status jointly. Married couples are allowed to file the documents together. Relevant revenues of both partners, deductions, as well as immunities, can be taken into account. This joint filing status presupposes a higher tax refund, or, in certain cases, a reduced tax assessment.
It is recommended to submit a declaration together, especially in case of having considerable earnings by one of spouses. For couples with stable workplaces and different itemized deductions, the referred to below filing can be more beneficial.
Spouses submitting declarations separately. Married couples are able to file their tax returns independently. It could be favorable for taxpayers who are willing to be responsible only for their own duties. The status results in fewer imposts than filing a joint declaration.
Primary breadwinner. Taxpayers, who are not married or hold a single status, may submit to obtain a category. Anyway, special rules should be regarded. For instance, an individual is obliged to pay more than half of his own cost for house maintenance. Moreover, a taxpayer can apply for this filing status, only in case of having qualifying family members for a period amounting to more than six months.
The expenses for accommodation include rent, or loan facilities, safety wares, utility bills, as well as other types of household spendings. A noteworthy detail is that the list of family members comprises a grandparent, a grandchild, a dependent child, a sibling, or other relatives mentioned as exemption. So that a primary breadwinner has the lower taxes.
Qualified widow or widower with a dependent child. A taxpayer is assigned to this status, in case of the registered partner’s death. The following two years after the passing away of a spouse, can be considered as the basis for applying this category. A living party is able to insist on a deduction as for the spouses, submitting filing status jointly.