 Hello and welcome to the session in which we would look at the filing status of the individual when they filed their tax return. And here are the filing status looking at the form 1040, single, married filing jointly, married filing separately, head of a household or qualifying surviving spouse QSS. I call this qualifying widow or widower and you will see why later on why I use this terminology. Now I just want to show you here because since I am looking at the tax return, it says here, if you check married filing separately, if you happen to be filing married filing separately, enter the name of your spouse. So the name of your spouse goes here because you're failing, you are filing separately from them, they're filing separately from you. Then it says here, if you check head of a household or qualifying surviving spouse, if you check this box or if you check this box, enter the child name of the qualifying child is a child that's not your dependent. So what happens sometime is to qualify under head of a household or qualifying surviving spouse, you have to have what's called the qualifying child. Now this qualifying child may or not be your dependent, most likely will be your dependent. But if they are not your dependent, put their name here. If they are your dependent, you put there's a section here where you put their name or social security relationship to you, whether they qualify you for the child tax credit or whether they qualify you for other dependent credit. We'll talk about that later. I just wanted to make point here because I'm looking at the form. So the five filing status are single, married filing jointly qualify widow or widower or what they call it the IRS qualifying surviving spouse, married filing separately head of a household. Before we proceed any further, I have a public announcement about my company Fahad Lectures dot com. Fahad Accounting Lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true false questions, as well as exercises. Go ahead, start your free trial today. No obligation, no credit card required. Starting with single, who would file a single? Well, the status is available for people who are unmarried, divorced, legally divorced or legally separated as of December 31st of that year, according to the state law. So let's assume George D was divorced in January and is unmarried at the end of the year. And also George does not claim any dependent, so they don't have any child or dependent. What is the filing status of George? Well, as the end of the year, he was divorced, unmarried. Well, what's available for them is single, single, married filing jointly. This is the most advantageous. Here, both spouse must be married to each other at the end of the tax year as of December 31st. Obviously, they have to be married. That's why it's called married filing jointly. Even if you got married on December 31st, so I'll tell you my story. I get married on December 27th. And I did, you know, back then my wife did not understand the tax law, but I insisted that let's get married between Christmas and New Year's Eve, but I really had a secondary motivation is to qualify for the whole year as a married filing jointly. Well, now my wife understands the concept and she's okay with it. And they both agree to file a joint return. Why? Because they must sign the same return. That's what married filing jointly is. And in this situation, both spouses would report their combined income and claim any credits and deduction on a single tax return. They will combine them together. Filing a joint tax return would result in the lower tax liability than filing separately. Because if you're married, you have either married filing jointly or married filing separately. There's a small exception we'll talk about later, but married filing jointly is the most advantageous. Okay, so if one person during the year passes away, then for that year you are considered married for the whole year. So let's assume in year X1, we have a couple in one of the, they're married filing jointly and one of them passed away. It's still married filing jointly for that year, assuming X1. Now, we're going to have another qualifying status called qualifying widow or widower or qualifying surviving spouse. That's what the IRS likes to use. So remember in the year of death, the married filing jointly will apply because they were married and one person passed away. So year one, year X1, year of death, they are married filing jointly. Now in the following two years, which is year X2 and year X3, if the surviving spouse, now here you have to have specific rules, if the surviving spouse remain unmarried, they did not get married and the end is important, have paid over half of the cost of maintaining a household. So the surviving spouse still maintaining household and paid more than half, where a child who is his or her dependent lived for the entire for the whole year, then you would qualify under qualify widow or widower or qualify surviving spouse. So to qualify under surviving spouse, you have to maintain a home, pay more than half of maintaining home and have a dependent child who lived with you for the entire year. So what happened if you don't have a dependent child and you are unmarried? Well, you go back to single. That's it because you were married filing separately and married filing jointly year one, year two and year three. Well, you are remaining unmarried, but you don't need the child or the dependent, then you are back to single. Now temporarily, the temporary absences are acceptable if the child was in college or in medical facilities. That's fine. And the child must be a child, your child, step child, including an adopted child, not a foster child. So does not qualify you. So let's assume that last year the taxpayer spouse passed away and pull out the surviving spouse that not remarried during the current year. So George was Polette's husband. Polette maintained a household for Tony and Maria who are her dependent children. Well, guess what? Under those circumstances, what's her filing status in the current year? The answer is qualifying surviving spouse. Last year, George and Polette were married filing jointly. Assume that Polette did not maintain a household for any dependent child and did not remarried. Well, under those circumstances, she will be single. Now let's talk about the least advantageous filing status and that is married filing separately. Now couples will choose to file a separate return. That's up to them. That's basically an option. Why? Maybe they want to keep their financing separate for whatever reason. It's an option and if one of the couples would like to have it, that's up to them. Okay, they both have to married filing separately. If one spouse itemizes, then the other will have to itemize as well. So let's assume we have husband and wife and they choose to marry filing separately. We have the husband and we have the wife and the husband, they have a lot of deductions so they can itemize 40,000 worth of deduction. The wife does not have a lot of deduction, maybe $500. If the husband itemized, then the wife will have to itemize. So why are we saying this? Because if you don't itemize, you can take what's called the standard deduction and the standard deduction is approximately $13,000 even for a single, the lowest one. So if one itemizes, so basically the wife cannot take the $13,000 or whatever that number is happens to be the change from year to year, she will have to itemize. Now what is itemization? We'll see later on. It's happened on schedule A. It's a list of items that you can bunch together and take as a deduction in total. So if one spouse itemizes, the other one will have to itemize, must itemize. Also, if you're married filing separately, you get penalized on many levels. For example, the individuals married filing separately, they cannot take interest deduction on student loan. Capital most deduction is limited to $1,500. Usually it's $3,000 but since you're married filing separately, you get penalized. Also, you don't qualify for any earned income credit, child and dependent care expense credit. Let's talk about head of a household. Well, who qualifies? You have to be unmarried because remember, if you are married, if you are married, you have two options. You have married filing jointly or married filing separately. So head of a household, you are unmarried as of the last day of the year. There's a small exception which I mentioned earlier called abundance spouse. I will talk about on the next slide. And so you have to be unmarried and maintain a home household which were you paid more than half of the cost of maintaining that household. Now the household is basically your home, the taxpayer home, and you have at least one qualifying person. And that qualifying person is typically your dependent such as child qualifying child or maybe other relative who lived with you for more than half of the year. So notice head of a household H, they have to live with you half of the year. Qualifying window or widower. The child will have to live with you the whole year. You see, W, W qualify, window or widower the whole year. That's why you qualify, window or widower. The whole year head of a household H, they only have to live with you half of the year. They have to be either your qualifying child. We're gonna look at a separate recording or qualifying relative. We're going to look at a separate recording, what's qualifying child, what's qualifying relative. Now for qualifying relative to to qualify you as a head of household, they must meet something called the relationship test. They have to be related to you. We'll talk about that later. But what's not related to you? Just kind of put it out there. Free loading boyfriend or girlfriend will not qualify. Let's assume you decided that your girlfriend or boyfriend moves in with you. They live there. You take care of the home. They're living there. So you maintain a household and they're living with you for more than half of the year. Well, they don't qualify you because they don't meet the relationship test. Well, let's assume you're a responsible friend or friends. You have an extra room, they lost their job and they're asking you if they can live with you. That's fine. They can live with you. But they are just friends. They don't qualify you as a head of a household for the for this qualification. Now your parents, they will qualify you and they don't have to live with you. Remember head of a household is the idea as you're maintaining a home and the person that you are taking care of is living with you for more than half of the year. Your parents can live in another home. And as long as you are taking care of them, then they are considered your qualifying relative. Then that's fine. They don't have to live with you. Just it's an exception. Now head of a household filing status result in a lower tax rate and a higher standard deduction than a single. That's why you want to have this because it gives you a better tax status. Now let's talk about abandoned spouse because when I talked about head of a household, I said you have to be considered unmarried or abandoned spouse. And what is an abandoned spouse? An abandoned spouse is someone who has been separated from their spouse either physically or financially without their consent. Let's just say physically to make it easy. So basically the person disappear. Now to qualify as an abandoned spouse, a taxpayer must generally meet the following criteria. The taxpayer must have lived from their spouse for the last six months of the year. So the past six months that said you don't know where they are. You know, they're not in touch with you. The taxpayer must have paid for more than half of the cost of maintaining a household for the taxpayer. Simply put, you are maintaining a household. You are maintaining a house for yourself. You're paying more than 50% of the cost and the taxpayer must have a dependent child that you can claim who lived with them for more than half of the year. Remember, this is it's going to take you to head of a household. So what are we talking about here? Here we're talking about single parents, single mom or single father who are taking care of the child or children where the other person where their spouse just basically, you know, took over. That's what we're talking about here. So remember, since the other spouse is not there, they cannot file merit filing jolly because you need to sign the return and the spouse is physically is not there. And you can, your other option is merit filing separately, but it's really disadvantageous for the taxpayer. So the Congress said, if you meet those criteria, those three criteria here, your spouse is away, you know, disappeared for the past six months, you are paying to maintain a household and you have a child in that household. Then we would allow you to qualify as a head of a household because we don't want to penalize you and force you to merit filing separately because that's your alternative. So this is why we have an exception for the abandoned spouse. So in this recording where I did, I went through the five filing status single merit filing jointly merit filing separately, head of a household qualify widow or widower or qualifying surviving spouse. The only thing I really did not get into and I said, I will look at it separate recording is what is a qualifying child and what's a qualifying relative because that's important when it comes to head of a household, when it comes to determine your dependency, your dependency and certain credit. I will do this in a separate recording. What should you do now? Go to phone health lectures and look at additional true, false, MCQs, exercises that can help you understand this important topic, the filing status of the taxpayer. Think about it. If you're taking the CPA exam and you don't understand this concept, I really don't want you to pass the exam as an individual, right? And the AI CPA will not allow you to pass. So those are easy points that you can pick up on the exam or on your enrolled agent exam. And if you're taken a tax course by all means, you want to know this and get an A. I'm always here for you invest in yourself invest in your career. Good luck and stay safe.