What is a filing status? Step 3 to get PREPARED for new parent taxes

Becoming a new parent changes everything — even your taxes. That’s why we are walking parents like you through our 8 steps to get PREPARED to get your full tax refund. Today we are digging into filing status — the strange terminology the IRS uses, but CRUCIAL for you to know because it determines the size of your tax refund.

Your filing status determines the size of your tax refund.

Your “filing status” is based on your marital status and on how much you contribute to covering “the costs of your home”. Kinda bizarre — we know! It is important though because it helps determine how much taxes you owe and the size of your refund. There are four main options to choose from, and we’ve outlined the key differences below. You can use an interactive tool from the IRS to help you identify your status as well.

As a new parent which filing status is the most accurate one for me?

There are parents in all of the following categories, but we find that most new parents should be using Head of Household or Married Filing Jointly.

1. Head of Household — This is the status used by most single parents or taxpayers who live with their child (or another dependent) who was born by December 31, 2020 and provide for them by covering more than half of the costs of keeping up a home. So, for example, let’s imagine that Kara is the mother to a new baby girl and is unmarried. Kara lives with her daughter, and pays for more than half the cost of keeping up the home. She should file as “Head of Household”, and her child’s father would be considered “single”. Taxpayers who are married, but who lived apart from their spouse for the last 6 months of the year may also use this status IF they are filing a separate return from their spouse, paid more than half the cost of keeping up the home, and live with their child.
2. Single — This status is used by single taxpayers who were unmarried and didn’t have a child as of December 31, 2020. Parents who are unmarried and have a child who will be claimed by the other parent would also use this status. The father in the example above fits this description!
3. Married Filing Jointly — This status is used for taxpayers who are married, live together, and will be filing taxes together. They may or may not have children. (If your spouse died in 2020, you will file as Married Filing Jointly or Married Filing Separately. If your spouse died in 2018 or 2019, you may be eligible to file as Qualifying Widower, but we encourage you to use the IRS tool to determine what filing status is best for you.)
4. Married Filing Separately — This status is used for taxpayers who are married, and will be filing taxes separately from their spouse. This filing status means you miss out on many tax credits, so it should only be used if absolutely required.

What if my spouse is a non-resident alien?

If you are a citizen or resident alien and your spouse is a non-resident alien (meaning NOT a US citizen or a US national), you have a choice. You can either file as Married Filing Jointly and consider them like a resident alien for tax-filing purposes. This gives you a larger standard deduction, but also means you have to consider your spouse’s income from all over the world and include that on your return together.

Your other option is to file as Head of Household if you meet that criteria of providing for more than half of the home costs and have a child who lives with you. With this option you take a smaller standard deduction and your spouse would file taxes separately.

You can read more about this from the IRS here or from TurboTax here.

What if I’m a new parent, under 18, and living with my mom? Can I still file as Head of Household?

It depends. First, you’d want to consider whether your guardian (mom in this case) could claim you and your child as dependents. If she can, then she will claim you and your child on her taxes. So, if you lived with the guardian for more than half of the year, are under age 18, made less than $4,200 in income, and didn’t provide more than half of your own “support” (meaning living expenses, food, etc.) then your mom would claim both you and your baby (her grandchild) as “qualifying children”. You’d be filing taxes with her.

If you didn’t meet all of those requirements then you would have to file taxes separately with your child, and would look to the guidelines listed above. If you were unmarried, you would be filing as Head of Household.

What about if I am a full-time student?

If you are married, your student status won’t change your filing status.

If you are unmarried and living with your guardian (like your mother), then you might be considered a dependent. First, ask yourself if you made more than $4,200. If the answer is yes, then you are NOT a dependent, and will be filing taxes by yourself and using the statuses above (like Head of Household). If the answer is no, then ask yourself whether you are under age 24, a full-time student, and don’t provide more than half of your own “support”. If all of those requirements are true then your guardian (mom in this case) will claim you (and your baby) as her dependents and you will file taxes together. However, if any of those requirements are unmet you will be filing on your own with your baby!

We hope that helps to clear some of this up! As always, if you have questions please email us at info@letsgetset.co. If you haven’t already, we hope you take Step 1 to use our tools to know where to file for free, and Step 2 to know what forms you need. You can watch this video to see the tools in action too.

Now that you know what status to use, we want to be sure you know where you will get your refund deposited. Using direct deposit allows you to get your refund the fastest way possible, and will be really important this year given all the delays from the extra pressure on the IRS with the stimulus payments.

Up Next: Step 4: Pick where you’ll deposit your refund