The big question when picking your filing status is whether you're married in the eyes of the IRS. Even if you and your spouse live apart, if you're married on Dec. 31, you're married for that year as far as IRS Form 1040 is concerned. That still leaves you with several choices of filing status. Legally married same-sex couples have the same options as opposite-sex pairs, but domestic partners don't.
Joint Vs. Separate
Even if divorce or legal separation is inevitable, you can file a joint return as long as you're still married. This gives you the best deal on taxes, but you and your spouse both have to agree to file this way. If your spouse wants to file separately, then you have to do that. On a separate return, you report your own income and deductions, and nothing else. With separate returns, if one of you itemizes deductions, the other can't take the standard deduction.
Head of Household
Filing as head of household gives you lower tax rates than a separate return. To qualify, you have to file separately from your spouse, who has to live somewhere else for at least the last six months of the year. You must have a child living with you more than half the year, and you have to pay at least half your household expenses for the year. Add up the cost of food, rent, insurance, taxes, utilities and other household expenses, then divide by two to find out how much that is.
If you have dependents and file a joint return, it's no problem claiming an exemption for your children. When you file separate returns, however, the exemption only goes on one return. Usually, the parent who takes care of the child most of the year gets the exemption. If the child spends half the year with each parent, IRS Publication 501 details who qualifies for the exemption. The publication also lists all the other tests for claiming someone as a dependent.
There are many cases in which moving out doesn't affect your status. For example, if your spouse is in the hospital for most of the year, or stationed overseas, legally, she's still living with you. You can't claim head of household, so just file a normal separate or joint return. Likewise, a child who has to spend several months in boarding school or the hospital still counts as living at home when you're qualifying him as a dependent.
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