Help Your Students and Their Parents Determine Tax-Filing Status

The U.S. Department of Education requires financial-aid administrators to know the tax-filing status of students and parents who are applying for financial aid.

USA Funds^® University advises that a person’s Internal Revenue Service tax-filing status depends on marital status. The U.S. tax code defines marriage as a legal union between a man and a woman as husband and wife. The following are the five IRS tax-filing statuses.

• Single. A person’s filing status is single if, on the last day of the year, that person is unmarried and does not qualify for another tax-filing status, such as head of household or qualifying widow(er) with dependent children.
• Married, filing jointly. This filing status combines the income and deductions of both spouses on the same tax return.
• Married, filing separately. This filing status is for married couples who choose not to file jointly with their spouses.
• Head of household. If the following conditions are met, a person can file as head of household:
  • The person is considered unmarried on the last day of the year.
  • The person paid more than half the cost of maintaining a home for the year. Expenses that can be included when determining the cost of home maintenance are:
    • Property taxes.
    • Mortgage interest.
    • Rent.
    • Utility charges.
    • Upkeep and repairs.
    • Property insurance.
    • Food consumed on the premises.
    • Other household expenses.
  • A qualifying person lived with the person for more than half the year.
• Qualifying widow(er) with a dependent child. If a spouse died during the tax year, the surviving spouse can file a joint return for that tax year. For the two years following the death of a spouse, the surviving spouse can file using the status, qualifying widow(er) with dependent child, if all of the following apply:
  • The surviving spouse was entitled to file a joint return during the deceased spouse’s year of death, even if the couple didn’t actually file a joint return.
  • The spouse died in one of the two years preceding the tax year, and the surviving spouse did not remarry before the end of the current tax year.
  • The surviving spouse has a child, stepchild, adopted child or foster child for which an exemption can be claimed by the surviving spouse.
  • The surviving spouse paid more than half of the cost of maintaining a home as the main residence in which the surviving spouse and the child lived for the entire year, except for temporary absences.

  If the qualifying child was born or died during the tax year, and the surviving spouse provided more than half the cost of maintaining a home that was the child’s main residence during the part of the year the child was alive, the surviving spouse can file as a qualifying widow(er) with a dependent child.

  For students and parents applying for financial aid, financial-aid administrators also must know if a student or parent was required to file a tax return with the IRS, and when a dependent can be claimed as a tax exemption. In addition, financial-aid administrators should know when a mismatch exists between a student’s or parent’s assets reported on the Free Application for Federal Student Aid and the income reported from assets.

  Information about these topics and more about tax-filing requirements is available in the USA Funds online course “Tax-Filing Requirements,” one of more than 50 available in the online-training curriculum for financial-aid professionals.