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Do you really know your best filing status?

Hi!

Choosing the correct filing status is very important. We have the following choices:

  1. Single
  2. Married filing jointly
  3. Married filing separately
  4. Head of household
  5. Qualifying widow(er) with dependent child

Your filing status selection, if planned properly in advance, can have an effect of thousands of dollars on your tax returns. Actually, we see filing status differences in the 10s of thousands of dollars in tax on a regular basis! 💰

Considerations include:

  • Filing jointly for some situations can be the best option due to a larger standard deduction, education credits, income tax credits, etc.
  • Married filing separately. This rarely-used status may result in less tax owed than filing a joint tax return, such as one spouse has low income with high medical bills, one spouse has low income & paying student loans, etc. There are many factors that influence this & we recommend running scenario testing each time you have a major change in tax circumstances
  • Head of household is an overlooked tax status that is often missed and can also make a significant dent in your tax obligation. We have even gone back and amended returns for those that did not know they qualify and gotten them thousands refunded in taxes!
    • Taxpayer filed single but had opportunity to claim someone – does not even have to be a family member
    • Taxpayer filed “married filing separately” but could have filed HOH instead due to having a dependent
  • Whether your dependents are working & what selection they are making on their own tax returns (and at their employers) can impact how you file & other decisions prior to year-end
  • Who is claiming dependents and when – this alone can have a significant tax effect
  • Location of each family member – you may be able to claim parents, for example, even if they are residents of Canada or Mexico
  • Divorce and separation considerations and available filing statuses for each

If you need help planning & making sense of the above, please reach out within the next week so we can get a plan ready for you. Some strategy suggestions may take time to implement, and we are running close to year-end.

Looking forward to hearing from you!

—

George Dimov CPA

www.dimovtax.com

(833) 829-1120 toll free