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Individuals who are married on the last day of a year (or whose spouse died during the year) have the option of filing a joint or separate return. Electing to file a joint return will usually produce a lower tax liability. Therefore, about 97% of married couples file a joint return. However, there are exceptions. For example, due to the AGI limitations itemized deductions could be increased (lowering taxable income) if one spouse has substantial medical expenses or unreimbursed employee expenses. A husband and wife who elect to file separate returns must allocate their itemized deductions between them. Only the spouse who paid and is legally obligated to pay deductible expenses is entitled to the write-off. Joint expenses such as real estate taxes and mortgage interest must be split.
Pointer: Often a married couple should compute their tax liability under both options to determine which produces the lower tax cost. Remember, married individuals who initially file separately may amend to file a joint return within the three year period. But a joint return can not be amended to married filing separate.
Generally an unmarried individual as of December 31 will file as a single taxpayer. There are certain exceptions.
Widows and widowers who have not remarried can file a joint tax return for the year of the spouse's death and can use the tax rates as well as the standard deduction. If he or she provides over one-half of the cost required to maintain a home for a dependent child, the joint return rates and deductions can be used for 2 years after the death of the spouse.
If certain conditions are met, unmarried individuals can file as head of household and take advantage of higher deductions and lower taxes. You will qualify if you are a citizen or unmarried resident alien on the last of the year and:
1. You pay more than one-half of the cost of maintaining your home, which for more than one-half of the year is also the principal residence of your child or any other relative that you can claim as a dependent; or
2. You pay more than one-half the cost of maintaining a parent's principal residence (not necessarily your home) and you are entitled to claim that parent as a dependent.
A married individual can also qualify for head of household if the taxpayer's spouse did not live with the taxpayer during the last six months of the year and the taxpayer's household is the principal residence of a child for whom the taxpayer is entitled to claim as a dependent, or is the custodial parent not claiming a dependency deduction due to the transfer to a noncustodial parent.