Tax filing status

Many people have more than one filing option available to them. Choosing the wrong one can cost you a bundle.

Single - This one seems pretty simple, but if you are married and separated, this filing status could apply to you. You can be legally married, but for tax purposes you could be considered unmarried if certain conditions apply. The parameters that consider you unmarried are contained in IRS Publication 501. Visit this link for more information.
http://www.irs.gov/publications/p501/ar02.html#d0e1485

If you are married for tax purposes, you have two choices on your filing status. Married filing jointly and married filing separately. In most cases, filing jointly will provide you a much better benefit. The status of filing separately is restrictive and eliminates or reduces some common deductions and credits.

There will be instances where filing separately will produce a better benefit. For example, in the state of Ohio you will generally get a better benefit on your state taxes by filing separately. Your Ohio filing status has to match your filing status on your federal return. You may pay more in federal tax, but what you saved on your Ohio taxes could be enough to offset it providing you with a greater overall refund or lower overall tax bill. Ohio has a progressive rate structure with no penalty for filing separately. They actually encourage it for the savvy tax person. I am not sure why Ohio lets this happen because the net result will mean more tax dollars for the Federal government and less for Ohio.

The last filing status, and this one causes the most confusion, is Head of Household. You must be unmarried for tax purposes and have a "qualifying person" in order to use this filing status. The most common use of this status is for a single mother or father with a child that fits the definition of a qualifying person. A lesser known use is if your parent is a qualifying person. If you are taking care of a parent and qualify for the Head of Household filing status, make sure your Tax Preparer is aware of you situation. The tax rates are significantly better for Head of Household than it is for the Single filing status.