How to choose the right federal tax filing status

If you’ve ever stared down IRS tax brackets trying to figure out where you fit, you’ll notice filing status has an outsized impact on your federal income tax. Your filing status determines not only which tax forms you fill out but also your eligibility for certain tax credits, which tax deductions you can take, and other tax benefits.

Let’s take a close look at the five filing statuses and how they affect your tax liability.

What is a tax filing status?

Your filing status is a collection of household characteristics that determine the rate at which your adjusted gross income (AGI) is taxed. It’s influenced by the following factors:

  • Marital status
  • Number of dependents or children
  • Occupation
  • Dependent care expenses
  • Income

Choosing the right filing status is crucial because it affects your standard deduction amount, the child tax credit or earned income credit you’re eligible for, and many other tax credits that could significantly lower your taxable income, and ultimately the amount of tax you pay.

Kaz Weida | Yahoo Finance

Related News

Browse By Category

Share:

Send Us A Message