How does my filing status affect my tax deductions, credits, and rates?

Your filing status is an important factor in determining if you are required to file, the amount of your standard deduction, your tax rates, and your total tax liability. Your filing status also determines whether you can take certain deductions and credits. The 2003 standard deductions are: Single, $4,750; Head of Household, $7,000; Married Filing Jointly or Qualifying Widow(er), $9,500; and Married Filing Separately, $4,750.

For 2004, the standard deduction rises to: Single, $4,850; Head of Household, $7,150; Married filing jointly or qualified widower, $9,700; and married filing separately, $4,850. You cannot take advantage of certain tax benefits if you use the Married Filing Separately filing status. For example, if you file separately, you cannot take the rental real estate loss allowance of up to $25,000, or claim education credits or the earned income credit.

Your options for filing status are determined by your personal and family status, such as whether you have dependents and if you are married. Your marital status at the end of the year is what counts -- if you are single most of the year but get married on December 31, you are considered married for the entire year for tax purposes.