When you prepare your personal income tax forms each year, you'll need to choose a filing status. If you're married, you can file singly, jointly or as head of household. The correct choice for your situation can save you from paying thousands of dollars in extra taxes or get you a nice refund. Understanding the tax difference between head of household and married filing jointly will help you make the right choice and get the benefits you deserve.
Consider also: Tax Filing Status: How to Choose the Correct Filing Status
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What Is Filing Status?
When you file your taxes, the amount of tax you pay, credits you qualify for and other benefits you can get will depend on your life situation, which can impact whether or not you receive certain tax credits, if you can claim dependents, what your tax rate is and other factors. You must choose from one of five different filing status options:
- Married filing separately
- Married filing jointly
- Head of household
- Qualifying widow(er) with dependent child
You must choose only one of the five options. If you are single and are raising your children by yourself, you can't choose single and head of household. If you're married with kids and are the breadwinner, you can't choose either of the married filing status options and head of household.
Married Filing Jointly
The married filing jointly option allows you and your spouse to file one return, instead of each of you filing separate returns. This is convenient when the two of you don't have complicated returns, such as two partners who run their own small businesses.
If you file jointly, you'll usually pay lower taxes. For example, if you file jointly, you'll get a bigger standard deduction than if you file separately.
In addition, you can lose up to eight tax benefits and credits if you file separately instead of jointly, according to the divorce law firm Meriweather & Tharp. Among these are the Child and Dependent Care Credit, deductions for tuition, fees and student loan interest and tax-free exclusion of Social Security benefits and bond interest. This is why many couples who are going through a divorce still choose to file as married filing jointly their final year together.
Other benefits of filing jointly include lower income tax rates, qualifying for medical cost deductions and a deduction for contributing to your IRA.
Head of Household
You qualify for head of household if you are single and pay more than 50 percent of the household expenses for a qualifying dependent. This can include a parent, child or other relative who meets certain criteria. Heads of households have better tax brackets than single or married filers, so they might pay lower income taxes.
Two former spouses who are no longer married can both file head of household if they file separately and claim different dependents. Parents cannot claim the same child or children as dependents if each pays half the costs of the children – you only qualify for head of household if you pay more than 50 percent of a dependent's expenses.
Two parents can file head of household if one claims one or more children as dependents and the other claims one or more different children as dependents. Two people can even claim head of household while living at the same residence, as long as they meet the head of household requirements.