Publication 501 - Exemptions, Standard Deduction, And Filing Information

the year, the spouses can choose to file a joint

year cannot claim this special allowance. Mar-

1) You should itemize deductions if your

return. If you do file a joint return, you and your

ried persons filing separate returns who lived

spouse itemizes deductions, because you

spouse are both treated as U.S. residents for the

apart at all times during the year are each al-

cannot claim the standard deduction.

entire tax year. See chapter 1 of Publication 519.

lowed a $12,500 maximum special allowance

for losses from passive real estate activities.

2) You cannot deduct interest paid on a quali-

Married Filing Separately

fied student loan.

See Rental Activities in Publication 925, Passive

Activity and At-Risk Rules.

3) You cannot take the credit for child and

You can choose married filing separately as

dependent care expenses in most in-

your filing status if you are married. This method

stances, and the amount that you can ex-

Joint Return After

may benefit you if you want to be responsible

clude from income under an employer’s

Separate Returns

only for your own tax or if this method results in

dependent care assistance program is lim-

less tax than a joint return. If you and your

ited to $2,500 (instead of $5,000 if you

You can change your filing status by filing an

spouse do not agree to file a joint return, you

filed a joint return). For more information

amended return using Form 1040X.

may have to use this filing status.

about these expenses, the credit, and the

If you live apart from your spouse and meet

If you or your spouse (or both of you) file a

exclusion, see Publication 503, Child and

certain tests, you may be considered unmar-

separate return, you generally can change to a

Dependent Care Credit.

ried and may be able to file as head of house-

joint return any time within 3 years from the due

4) You cannot take the earned income credit.

hold. This can apply to you even if you are not

date of the separate return or returns. This does

divorced or legally separated. If you qualify to file

not include any extensions. A separate return

5) You cannot exclude any interest income

as head of household, instead of as married

includes a return filed by you or your spouse

from qualified U.S. savings bonds that you

filing separately, your tax may be lower, you may

used for higher education expenses.

claiming married filing separately, single, or

be able to claim the earned income credit and

head of household filing status.

6) You cannot take the credit for the elderly

certain other credits, and your standard deduc-

or the disabled unless you lived apart from

tion will be higher. The head of household filing

your spouse for the entire year.

status allows you to choose the standard deduc-

Separate Returns

tion even if your spouse chooses to itemize

After Joint Return

7) You cannot take the education credits (the

deductions. See Head of Household, later, for

Hope credit and the lifetime learning

Once you file a joint return, you cannot choose

more information.

credit).

to file separate returns for that year after the due

Unless you are required to file sepa-

8) You cannot take the exclusion or credit for

date of the return.

TIP

rately, you should figure your tax both

adoption expenses in most instances.

ways (on a joint return and on separate

9) You will become subject to the limit on the

returns). This way you can make sure you are

Exception. A personal representative for a

child tax credit, the limit on itemized de-

using the method that results in the lowest com-

decedent can change from a joint return elected

ductions, and the phaseout of the deduc-

bined tax. However, you will generally pay more

by the surviving spouse to a separate return for

tion for personal exemptions at income

combined tax on separate returns than you

the decedent. The personal representative has

levels that are half of those for a joint re-

would on a joint return because the tax rate is

1 year from the due date of the return to make

turn.

higher for married persons filing separately.

the change. See Publication 559 for more infor-

10) You may have to include in income more

mation on filing income tax returns for a dece-

of your social security benefits (or any

dent.

How to file. If you file a separate return, you

equivalent railroad retirement benefits)

generally report only your own income, exemp-

than you would on a joint return. For infor-

Head of Household

tions, credits, and deductions on your individual

mation on social security and railroad re-

return. You can claim an exemption for your

tirement benefits, see Publication 915,

You may be able to file as head of household if

spouse if your spouse had no gross income and

Social Security and Equivalent Railroad

you meet all of the following requirements.

was not the dependent of another person. How-

Retirement Benefits.

ever, if your spouse had any gross income or

1) You are unmarried or considered unmar-

11) You cannot roll over amounts from a tradi-

was the dependent of someone else, you cannot

ried on the last day of the year.

tional IRA into a Roth IRA during the year,

claim an exemption for him or her on your sepa-

unless you did not live with your spouse at

rate return.

2) You paid more than half the cost of keep-

any time during the year.

If you file as married filing separately, you

ing up a home for the year.

can use Form 1040A or Form 1040. Select this

12) Your capital loss deduction limit is $1,500

3) A qualifying person lived with you in the

filing status by checking the box on line 3 of

(instead of $3,000 if you filed a joint re-

home for more than half the year (except

either form. You must also enter your spouse’s

turn).

for temporary absences, such as school).

social security number and full name in the

However, your dependent parent does not

spaces provided. Use the Married filing sepa-

Individual retirement arrangements (IRAs).

have to live with you. See Special rule for

rately column of the Tax Table or Schedule Y – 2

You may not be able to deduct all or part of your

parent, later, under Qualifying Person. A

of the Tax Rate Schedules to figure your tax.

contributions to a traditional IRA if you or your

foster child must live with you all year.

spouse were covered by an employee retire-

ment plan at work during the year. Your deduc-

If you qualify to file as head of house-

Special Rules

tion is reduced or eliminated if your income is

TIP

hold, your tax rate usually will be lower

more than a certain amount. This amount is

Special rules apply if your filing status is married

than the rates for single or married fil-

much lower for married individuals who file sep-

filing separately.

ing separately. You will also receive a higher

arately and lived together at any time during the

standard deduction than if you file as single or

year. For more information, see How Much Can I

married filing separately.

Community property states. If you live in Ari-

Deduct? in Publication 590, Individual Retire-

zona, California, Idaho, Louisiana, Nevada,

ment Arrangements (IRAs).

New Mexico, Texas, Washington, or Wisconsin

and file separately, your income may be consid-

How to file. If you file as head of household,

Rental activity losses. If you actively partici-

you can use either Form 1040A or Form 1040.

ered separate income or community income for

pated in a passive rental real estate activity that

income tax purposes. See Publication 555,

Indicate your choice of this filing status by

produced a loss, you generally can deduct the

Community Property.

checking the box on line 4 of either form. Use the

loss from your nonpassive income up to

Head of a household column of the Tax Table or

$25,000. This is called a special allowance.

Schedule Z of the Tax Rate Schedules, to figure

Deductions, credits, and certain income. If

However, married persons filing separate re-

your filing status is married filing separately:

turns who lived together at any time during the

your tax.

Page 6

Publication 501 - Exemptions, Standard Deduction, And Filing Information - 2001 Page 6

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