Filing status is one of the first things you determine on every return, and getting it wrong throws off the entire filing. Here are the mistakes new preparers make most often.
Defaulting to Single When Head of Household Applies
An unmarried client with a child living in their home often qualifies for Head of Household, which gives them a larger standard deduction and more favorable tax brackets than Single. New preparers miss this because they don’t ask the right questions: Is the client unmarried as of December 31? Did they pay more than half the cost of maintaining the home? Did a qualifying person live with them for more than half the year?
Head of Household also carries IRS due diligence requirements under Section 6695(g). If you claim it without verifying eligibility, the penalty is $600 per return. Ask the questions. Document the answers.
Not Considering Married Filing Separately
Most married couples file jointly because the brackets are wider and more credits are available. But Married Filing Separately is the better choice in certain situations: one spouse has a liability issue, one spouse is on an income-driven student loan repayment plan, or the spouses don’t trust each other’s financial reporting.
Run both calculations before defaulting to joint. The difference can be thousands of dollars.
Missing Qualifying Surviving Spouse
For two years after a spouse’s death, the surviving spouse may qualify for Qualifying Surviving Spouse status if they have a dependent child and maintained a household. This preserves the Married Filing Jointly brackets during an incredibly difficult period. New preparers forget this option exists.
Not Verifying Marital Status as of December 31
A client who finalized a divorce on December 30 is unmarried for the entire tax year. A client whose divorce was finalized on January 2 is married for the prior year. The date matters, and clients don’t always know or remember the exact date. Ask, and verify.
Assuming “Separated” Means “Unmarried”
A client who says “we’re separated” is still legally married unless they have a final decree of divorce or separate maintenance. They must file as Married Filing Jointly or Married Filing Separately unless they qualify for Head of Household under the “considered unmarried” rules (which require living apart for the last six months of the year plus other conditions).
Filing status looks simple. It isn’t. Getting it right on every return is one of the things that separates a trained preparer from someone guessing.
For training that covers filing status, due diligence, and every other foundational topic, visit musespring.com.