One of the first steps in calculating your annual income tax is selecting the right tax filing status. It has an impact on your tax burden, permitted standard deductions, as well as particular tax benefits. While filing taxes can seem like a difficult task, there are certain advantages of being a solo filer that you may not be aware of. In this article, we will go through four tax advantages that can help solo tax filers have a bit easier time with the procedure. Let's get started!

Understanding Single Filers

A filing status must be selected by each individual who is required to submit an annual income tax return to the IRS. Taxpayers can file as an individual under one of five categories. These include head of household (HOH), eligible widow with a dependent child, married filing jointly, married filing independently, and single. The standard deductions and tax rates differ based on the filing status.

Individuals who do not meet the requirements for another filing status are considered as single filers. Those who are neither married nor legally separated from their partner under a divorce are also referred to as solo filers. Suppose you paid more than half of the costs of maintaining a place of living for yourself and another eligible dependent during the last six months of the tax year, and you did not live with your spouse. In that case, the IRS considers you an unmarried head of household, although you may still be married.

4 Tax Advantages for Solo Tax Filers

The basis of your tax return is your filing status, and it is very important to choose the right filing status. A solo filing status could be beneficial during tax refund season for a number of reasons.

Less Paperwork to File

Registering yourself as single on tax filings generally indicates that your life is less complicated overall, as your marital status and filing status frequently correlate. As a solo filer, your main concern should be with your personal tax returns.

There is no more waiting for your spouse's employer to deliver their W-2 or worrying about your partner accidentally throwing away an important tax record. As soon as you have all the required paperwork, you can start finalizing your tax return. In this way, you can get the money in your bank account immediately.

Flexibility in Deductions

Filing as a solo tax filer gives you more flexibility to select the deductions that best suit your personal situation. If you're a homeowner, for example, you might be able to itemize the deductions, which allows you to deduct particular costs instead of the standard deduction. This may be especially beneficial if you have large refundable costs, such as property taxes, mortgage interest, or nonprofit organization donations.

Being single gives you the freedom to customize your deductions to fit your unique financial situation. With this flexibility, you may be able to reduce your taxable income and take advantage of tax benefits.

No Unpleasant Tax Surprises

When the tax status changes, a lot of people find it challenging to figure out how the income taxes will be modified. As a solo filer, you are used to handling your own tax situation, and you usually know what to expect. However, if you file jointly after being married, any tax debts that your spouse bears will become your tax burden as well. For many newlyweds, a sudden change in filing status can have unexpected consequences, even if your partner has no unpaid taxes.

Due to inadequate income tax withheld, you and your partner might end up paying money on the returns during tax season instead of receiving the tax return you are used to collecting. Make sure your tax withholding is on track if you go through a significant life event, such as getting married or having a child.

Student Loan Interest Deduction

The tax regulations provide significant support to solo tax filers who are currently making student loan installments. The student loan interest deduction allows consumers to pay off a maximum of $2,500 in interest on loans that meet certain requirements. This deduction directly lowers taxable income and is available to individuals who do not wish to itemize their deductions.

This specific benefit helps lessen the financial burden of student loan payments, which is especially helpful for single filers who are actively investing in their education and careers.

Single Filer vs Head of Household

Individuals who are single and live alone could consider themselves as the head of their home. However, the IRS has different regulations that set solo filers apart from heads of households. In general, HOH status is only granted to single individuals who paid for more than half of their own and their eligible dependent's living costs for the current tax year.

The IRS lists a number of payments that can include utilities, repairs, real estate taxes, house insurance, and payments for rent or mortgage. It takes more than just having a dependent to qualify for head of household status. In general, the eligible individual needs to be a parent, child, or other family who lives with you for a minimum of half the year. Head of household (HOH) filers pay a lower tax rate than single filers and are excluded from paying income tax until they reach a higher income level.

Conclusion

In conclusion, individuals who register as solo filers benefit from a number of tax advantages that can have a significant impact on their total tax burden. Through tax breaks designed specifically for singles and a higher standard deduction, the tax laws provide possibilities for single filers to optimize their financial positions.

Understanding these benefits and exploring relevant credits and deductions is essential for single people handling the tax filing procedure. You can take advantage of these chances and possibly take advantage of a more favorable outcome during tax season by setting your filing status to single.