Taxes are fun, said no one ever, well, except for me and the IRS. There’s nothing I can say to make taxes fun for you to read, but what I can do is explain taxes in a way that you can understand better than trying to read the exciting and thrilling IRS tax code book.
One of the things people may get confused about are all the numbers. Yes, there are a lot of numbers. IRS loves them some numbers! So, let’s go over the first set of numbers you’ll encounter when you’re filing taxes for the first time. All taxpayers,
including small businesses, start by filling out a 1040. Ok, that’s simple, well yes and no. There are different versions of the 1040 such as 1040-SR for seniors and 1040-NR for nonresidents and 1040-X.
1040-X sounds like a treatment for some alien bugs that has invaded your home, doesn’t it? In reality, it is the form to use when you have to do the unexpected and dreadful amended return. Yikes! I’ll discuss this in a later blog.
For now, we’ll start with reviewing the top portion of the Form 1040. If you want to follow along, go to IRS.gov and type in ‘Form 1040’ in the search bar and click on the form link. Some might think the top part is straightforward, but since this is the IRS, you know there’s going to be some complications.
Let’s discuss what your filing status should be.
To be able to check the Single box, you must be single. That means you’re either not married or you’re divorced and haven’t remarried. But you shouldn’t check this box if you have children or dependents that you’re going to claim. Also, you can’t claim single if you are still technically married. To claim single, you must be legally divorced or separated by state decree. You also must not have been living with your soon-to-be-former spouse for at least six months and have paid for over 50% of your expenses.
So, now we move on to Married Filing Jointly. This is simple right? Of course not. It is the IRS! Married filing jointly (MFJ) can be checked if you are married. Yes, you can claim this if you live in a state that allow same-sex couples to be married legally. But did you know the IRS will accept it even if your state doesn’t? Yes, IRS is progressive in its thinking. Yay, for the IRS!
Married Filing Separately (MFS) is one of those boxes that doesn’t get checked unless you or your tax professional has calculated both MFJ vs. MFS to see if your tax liability is lower if filing MFS vs. MFJ. MFS will disallow certain deductions and credits, so make sure the analysis is done prior to checking this box.
So, now let’s discuss Head of Household (HOH) filing. This one gets a bit complicated. If you’re single or considered unmarried for the tax year and can claim a child or dependent and you pay for more than half his/her expenses, then you can claim HOH. But, did you know you can claim HOH if your ex-spouse claims your child? Yes, if your divorce decree allows you and your spouse to claim alternating years you can still claim HOH! Please don’t forget this as you will get a bigger standard deduction than if you claimed single!
The Qualifying Widow(er) box applies for 2-years after if your spouse has unfortunately passed. After that you must claim single or head of household if you qualify according to the above information.
I know this is a lot of information for just the Filing Status portion but if you get this wrong, the IRS can pull your filed taxes for review (even if e-filed!), so be sure to check the right box accordingly. Always remember, if you need help filing your taxes, never hesitate to research, review IRS.gov or hire a tax professional who is well versed in your tax filing needs.
Schedule your next tax appointment with Angie Love’s Taxes.
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