There are five filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying widow or widower with dependent child.
Your filing status depends on your marital status, household living arrangements, and people dependent on you for support.
If you fit in more than one category -- that is, a single person with a child may be in both the single and the head-of-household categories -- choose the category with the most advantageous tax rate schedule.
There are four tax-rate schedules, shown in Section 6 of the booklet. In order of relative tax advantage, they are: joint for most married taxpayers and certain surviving spouses; head-of-household; single; and married filing separately. These tax rate schedules readily correspond with four of the five filing statuses.
The fifth filing status -- qualifying widow or widower with dependent child -- is intended to allow certain taxpayers to use the joint tax rate schedule, which generally will be more advantageous than use of the single or head-of-household schedules.
A single person -- not a widow or widower -- living with a dependent child may qualify as either a single taxpayer or a head-of-household taxpayer. Generally the latter will be better. Marital Status
For tax purposes, your marital status is established by circumstances on Dec. 31, 1990. If you were married on that date, you are considered to have been married for the entire year. But if you were unmarried then -- whether never married, divorced, legally separated or widowed in a prior year -- you are considered single for all of 1990. Single or Head Of Household
If you were not married on Dec. 31, 1990, generally you must file your return as a single person. However, you may qualify as head-of-household and pay less tax if a "relative" (see below) lived with you for more than half the year in your home, including times of temporary absences for school, vacation or hospitalization, and you pay more than half the upkeep costs of your home.
For this purpose, "relative" means:
Your unmarried child, stepchild, adopted child or grandchild, whether or not he or she qualifies as your dependent.
Your dependent foster child; any child of yours who is married at the end of the year, if he or she can be claimed as your dependent. If such child is claimed by his other parent under the rules applicable to children of divorced or separated parents, you may still qualify as head-of-household.
Any other lineal descendant or ancestor -- listed in the booklet at Section 4, line 6c -- you claim as a dependent, but not including a dependent under a multiple support agreement.
If you have paid more than half the costs of maintaining a separate home for your dependent father or mother -- including living arrangements in a nursing home -- you can qualify for head-of-household status.
Certain married persons who live apart from their spouse may qualify as head-of-household.
To do so, you must have lived apart from your spouse during the last six months of 1990; you must also have paid more than half the expense of maintaining your home; your home must have been the principal home -- for more than half the year -- of your child, stepchild, adopted child or foster child; and such child must qualify as either your dependent or the dependent of his or her other parent.
Most married people elect to file a joint return rather than separate returns, for example, the married-filing-separately status.
Married people may file a joint return even if only one had income or even if they did not live together, as long as they are not legally separated.
The main advantage of filing jointly rather than separately results from being able to use the joint tax rate schedule and file just one return. There may be other advantages to filing jointly, for example:
Less Social Security benefits may be taxable on a joint return. The earned income credit may be claimed.
The child-care credit may be claimed.
You may itemize your deductions; if your spouse filed a separate return and used the standard deduction, you couldn't itemize.
On the other hand, there may be instances where it benefits married taxpayers, each of whom has substantial income, to file separately. For instance:
You may be able to avoid the phaseout of personal and dependency exemptions in the 33 percent tax bracket.
You may be able to deduct more of your medical or miscellaneous deductions or casualty losses, each of which are deductible only in excess of a certain percentage of AGI.
If your spouse died during 1990 and you did not remarry by Dec. 31, you may file a joint return for 1990 and claim the personal exemption of your deceased spouse as well as your own.
Sign the return and write "Filing as surviving spouse" under your signature. Also write "Deceased," your spouse's name, and the date of death, across the top of the return.
If you were not the executor or administrator of the estate, the personal representative -- if one has been appointed -- also must sign the return.
If your spouse died in 1988 or 1989 and you hadn't remarried by the end of 1990, you may be eligible to file as a qualifying widow or widower if you meet both of these tests:
Your dependent child lived with you, except for temporary absences, the entire year in your residence, for which you paid over half the expenses.
You filed or could have filed a joint return with your spouse in the year your spouse died.
When you file as a qualifying widow or widower, you are given the right to use the joint return rates; however, this is not a joint return, and you may not claim a personal exemption for your deceased spouse.
If you cannot meet the qualifying widow or widower tests because, for example, your child lived with you less than the entire year, you still may qualify as head of household.
For 1990, each personal and dependency exemption is worth $2,050, up from $2,000 last year.
If you can't be claimed as a dependent by your parent or someone else, you are entitled to take a personal exemption for yourself.
This personal exemption is the same for all nondependent taxpayers. Taxpayers who are 65 years or older or blind get an addition to their standard deduction.
You can claim your spouse on your separate return only if your spouse does not file a return, has no income and cannot be claimed on someone else's return. Exemptions for Dependents
There are five tests that must be satisfied to qualify as a dependent. In general, a dependent must be related to you, have gross income of less than $2,050, have more than half of his or her support provided by you, not file a joint return with his or her spouse, and have been a U.S. citizen or resident alien.
The booklet on Section 4, line 6c fills in the gaps in applying these rules in different circumstances. Here are a few:
Relationship or member of household test: Virtually any lineal descendant or ancestor -- see the list in the booklet -- will qualify as your relative, including adopted children and in-laws. Once the relationship has been established, it is not ended by death or divorce.
For example, if your late wife's mother meets the other tests, you may claim her as your dependent after your wife dies -- even if you have remarried.
A person who lives in your home for the entire year as a family member, but not in violation of any local law, can also meet the relationship test.
Income test: In assessing the $2,050 income limitation, do not count bona fide gifts or income not subject to tax, such as nontaxable Social Security benefits.
Also, do not count income earned by a permanently and totally disabled person in a sheltered workshop, which income is incidental to the dependent's rehabilitative care and training.
The income test is waived for a child who at year end is either under age 19 or a full-time student under 24. The instructions amplify who is considered a full-time student.
Support test: The support test is based on the amount of cash actually expended by the taxpayer, the dependent and third parties, such as a grandparent, for the support of the dependent.
The taxability or nontaxability of the money so used doesn't matter.
You must have provided more than half of the support for a dependent during 1990, except for special circumstances involving children of divorced or separated parents and multiple support agreements.
Support includes the costs of most personal living expenses, such as food, shelter (for example, the fair rental value of lodging), clothing, education, medical expense, recreation and transportation, including the cost of an automobile.
Certain items aren't considered support, including income and Social Security taxes paid by the dependent on his own income, scholarships and life insurance premiums.
If you provided separate living quarters for the dependent, such as an apartment for an elderly parent, count the cost of that housing. But if your dependent lived rent-free in quarters you owned, then use the fair market value based on comparable housing, rather than the cost.
Joint return test: Although a married dependent cannot generally file a joint return and still qualify as your dependent, a married person who files a joint return solely to claim a refund of taxes withheld still may qualify.
You also may be able to claim an exemption for a person whose spouse files a separate return and doesn't claim that person as his or her dependent.
Special rules for children of divorced parents: For a divorce or separation agreement executed after Dec. 31, 1984, or for earlier decrees if modified after that date, the custodial parent automatically gets the dependency exemption for a child, regardless of which parent provides the support, as long as both parents together provide more than half the child's support.
For couples who were divorced or separated before Jan. 1, 1985, and who haven't modified the original decree after Dec. 31, 1984, the noncustodial parent can take the exemption if the decree so stipulates and if that parent contributes at least $600 for the child's support in 1990.
Check the "pre-1985 agreement" box on line 6d on Form 1040, if this is the case.
In any event, the custodial parent may waive the exemption in favor of the noncustodial parent by signing Form 8332 "Release of Claim to Exemption for Child of Divorced or Separated Parents," which the noncustodial parent should attach to his or her return.
Note, however, that by granting the waiver, the custodial parent does not lose other tax benefits and still may be able to claim head-of-household filing status, the earned income credit, and child care credit.
Several people may jointly support a dependent, such as siblings sharing the cost of caring for a parent, with no single person contributing more than half of the support.
If together you contribute more than half, one member of the group may claim the exemption if he or she provided at least 10 percent of the total and the others agree.
Each year a different taxpayer may claim the exemption, so it may be rotated from year to year.
Each eligible contributor must sign an IRS "Form 2120 Multiple Support Declaration" agreeing to the arrangement; the taxpayer claiming the exemption must then attach all the signed Forms 2120 to his or her tax return.
Social Security Number
If you claim as a dependent a person who is 2 years or older, be sure to enter that person's Social Security number on the line 6c, along with his or her name, on Form 1040 or 1040A.
If your dependent does not yet have a Social Security number, you should apply for one by filing Form SS-5 with a local Social Security Administration office.