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Single, married, or head of household: Which marital status pays the least taxes?

The filing status with which you report to the IRS determines how much you pay in federal and state taxes each year, hence the importance of knowing the advantages and disadvantages of filing as single, married filing jointly, or head of household.


Let's say you make $ 40,000 a year. The amount of taxes you pay will depend on the marital status for which you qualify. The difference in the tax rates assigned to each status is significant and will make the difference between spending up to 10% or 35%.


In addition, as your income increases, a fraction of that figure will be subject to different tax brackets that will progressively increase the percentage of taxes you pay on that income.


If your marital status was single in 2021, for example, you would have paid 10% of your income up to $ 9,950 and then 12% of your income between that and $ 40,525. In contrast, a married couple filing a joint return for the same year stays at 10% until their joint income reaches $ 19,900, while for the head of household, the limit is $ 14,200.



BUT HOW CAN I KNOW WHICH MARITAL STATUS CORRESPONDS TO EACH CASE? THE IRS ESTABLISHES THE FOLLOWING CLASSIFICATION AND REQUIREMENTS:


SINGLE

If on the last day of the year you are not married or legally separated from your spouse by virtue of a separate divorce or maintenance decree and you do not qualify for another marital status for the purposes of the declaration.


MARRIED FILING A JOINT DECLARATION

You are married and both you and your spouse agree to file a joint return. (On a joint return, they report their combined income and deduct their combined allowable expenses.)


MARRIED FILING A SEPARATE DECLARATION

You must be married. This method may benefit you if you want to be solely responsible for your own taxes or if this method generates less tax than a joint return. If you and your spouse do not agree to file a joint return, you may need to use this marital status for filing purposes.


FAMILY BOSS

You must meet the following requirements:


  • You are not married or it is considered (separation process) that you are not married on the last day of the year.

  • Pay more than half the cost of maintaining a home during the year.

  • A qualifying person lived with you in the home for more than half the year (except temporary absences, like school).

WIDOW WITH MARITAL STATUS OF A DEPENDENT CHILD

If your spouse died in 2021, you can use the joint married declaration as your marital status for the purposes of the 2021 declaration you are eligible to use that status. The year of death is the last year for which you can file a joint return with your deceased spouse.


You can use a qualifying widower with a dependent child as your filing status for two years after the year of your spouse's death. For example, if your spouse passed away in 2019 and you have not remarried, you may be able to use this marital status for the years 2020 and 2021. This marital status entitles you to use joint return and tax rates. higher standard deduction amount.


WHICH CIVIL STATUS PAYS LESS TAXES?


The three boxes on Form W-4 correspond to the five filing statuses that taxpayers must choose from when filing their annual Form 1040 tax.


Married taxpayers can choose to file jointly on the same tax return or separately on different tax returns, whichever is more advantageous in their situation. In most cases, filing a joint tax return will result in a lower tax bill.


The box you check on your W-4 will determine the standard deduction and tax rates that are used to calculate your withholding. All other things being equal, married taxpayers who plan to file a joint return will have fewer withholdings as a percentage than singles or people with other states. This is because married taxpayers are likely to pay less tax when they file their returns for the year.


If your marital status changes, you will need to file a new W-4 form so your employer can adjust withholding.


The standard deduction for single filers and married filers, for example, was $ 12,550 for tax year 2021 (increasing to $ 12,950 in 2022), while married filers get double, or $ 25,100 (increasing to $ 25,900 in 2022).


Similarly, singles pay taxes at the lower marginal tax rate of 10% on just their first $ 9,950 in income in 2021 (increasing to $ 10,275 in 2022), while married couples filing jointly pay taxes to that rate on your first $ 19,900 in income (which increases to $ 20,550 in 2022). In the higher marginal tax brackets, married taxpayers continue to benefit.


WILL I GET A HIGHER TAX REFUND IF I FILE IN A JOINT?


Most of the time, you will get a larger refund or a lower tax bill if you file a joint return with your spouse. However, this will vary based on your tax situation. If you apply separately, you will not be responsible for your spouse's penalties or interest, so the choice of how to apply depends on your situation and what is most advantageous.


ARE THERE ADVANTAGES TO DECLARE AS HEAD OF THE HOUSEHOLD?


Yes there are. The head of household can claim a standard deduction 50% higher than that of single taxpayers ($ 18,650 vs. $ 12,400). They also benefit from broader tax brackets at lower income levels. For example, a head of household pays a tax rate of 10% on income up to $ 14,100, compared to $ 9,875 for single taxpayers, and 12% on income up to $ 53,700 compared to just $ 40,125 for single taxpayers.


Such status also improves the terms for claiming various tax credits and increases the income threshold to qualify for economic impact payments ($ 112,500, compared to $ 75,000 for single taxpayers).


Head of household status is intended to help single parents who take responsibility for two parents on their own.


However, the problem is who meets the criteria to submit an application as such. Congress required tax preparers to obtain documentation proving that a person can actually file under that status in early 2021, as lawmakers believe many taxpayers mistakenly claim it.


Many people believe that if they are not married and have a dependent child, they qualify, but this is not always the case.


You are not married, recently divorced, or legally separated from your spouse. That means you must have lived in a separate residence from your spouse for at least the last six months of the year.


A separation because one of the spouses works in another state or is performing military service does not qualify. In that case, a separate tax return is required if you are still legally married.


In addition, the head of the family must pay more than half of the household expenses for the year in question. According to the IRS, these costs include rent, mortgage interest payments, property taxes and insurance, utilities, and groceries. Expenses such as clothing, education, medical treatment, vacations, life insurance and transportation are not included. You must also live with the qualifying dependent for more than half the year. Those dependents include children, stepchildren, adopted or foster children, grandchildren, or siblings. Children qualify as long as they are under the age of 19, or under 25 if they are students and earn less than $ 5,000 in annual income.


Parents can qualify as dependents as long as they pay more than half of the costs of their living arrangements, whether at home, in their own home, or in a nursing home. They do not have to live under the same roof.


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