Other Situations

You may have to file a tax return even if your gross income is less than the amount shown in Table 1 or Table 2 for your filing status. See Table 3 for those other situations when you must file.

Table 3. Other Situations When You Must File a 2002 Return

If any of the four conditions listed below applied to you for 2002, you must file a return.
1.	You owe any special taxes, such as:
	·	Social security or Medicare tax on tips you did not report to your employer. (See Publication 531, Reporting Tip Income.)
	·	Uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on group-term life insurance. (See Publication 531 and the Form 1040 instructions for line 61.)
	·	Alternative minimum tax. (See the Form 1040 instructions for line 43.)
	·	Tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. (See Publication 590, Individual Retirement Arrangements (IRAs), and Publication 969, Medical Savings Accounts (MSAs).) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself.
	·	Recapture taxes. (See the Form 1040 instructions for lines 42 and 61.)
2.	You received any advance earned income credit (EIC) payments from your employer. These payments should be shown in box 9 of your Form W-2. (See Publication 596, Earned Income Credit.)
3.	You had net earnings from self-employment of at least $400. (See Publication 533, Self-Employment Tax.)
4.	You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. (See Publication 533.)

Who Should File

Even if you do not have to file, you should file a tax return to get money back if one of the following applies.

1. You had income tax withheld from your pay.
2. You qualify for the earned income credit. See Publication 596, Earned Income Credit (EIC), for more information.
3. You qualify for the additional child tax credit. See the instructions in your tax forms package for more information on this credit.

Filing Status

You must determine your filing status before you can determine your filing requirements, standard deduction (discussed later), and correct tax. You figure your correct tax by using the Tax Rate Schedule or the column in the Tax Table that applies to your filing status.

You also use your filing status in determining whether you are eligible to claim certain other deductions and credits.

There are five filing statuses:

• Single,
• Married Filing Jointly,
• Married Filing Separately,
• Head of Household, and
• Qualifying Widow(er) With Dependent Child.

If more than one filing status applies to you, choose the one that will give you the lowest tax.

Marital Status

In general, your filing status depends on whether you are considered unmarried or married. A marriage means only a legal union between a man and a woman as husband and wife.

Unmarried persons.   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or a separate maintenance decree.

State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

Divorced persons.    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year.

Divorce and remarriage.   If you obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intended to and did remarry each other in the next tax year, you and your spouse must file as married individuals.

Annulled marriages.   If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. You must file amended returns (Form 1040X) claiming single or head of household status for all tax years affected by the annulment that are not closed by the statute of limitations for filing a tax return. The statute of limitations generally does not expire until 3 years after your original return was filed.

Head of household or qualifying widow(er) with dependent child.   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify.

Married persons.   If you are considered married for the whole year, you and your spouse can file a joint return, or you can file separate returns.

Considered married.   You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.

1. You are married and living together as husband and wife.
2. You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
3. You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
4. You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.

Spouse died during the year.   If your spouse died during the year, you are considered married for the whole year for filing status purposes.

If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child.

If you remarried before the end of the tax year, you can file a joint return with your new spouse. Your deceased spouse's filing status is married filing separately for that year.

Married persons living apart.   If you live apart from your spouse and meet certain tests, you may be considered unmarried. If this applies to you, you can file as head of household even though you are not divorced or legally separated. If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Also, your tax may be lower, and you may be able to claim the earned income credit. See Head of Household, later.

Single

Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status. To determine your marital status on the last day of the year, see Marital Status, earlier.

Your filing status may be single if you were widowed before January 1, 2002, and did not remarry in 2002. However, you might be able to use another filing status that will give you a lower tax. See Head of Household and Qualifying Widow(er) With Dependent Child, later, to see if you qualify.

How to file.   You can file Form 1040EZ (if you have no dependents, are under 65 and not blind, and meet other requirements), Form 1040A, or Form 1040. If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Use the Single column of the Tax Table, or Schedule X of the Tax Rate Schedules, to figure your tax.

Married Filing Jointly

You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Choose the method that gives the two of you the lower combined tax.

How to file.   If you file as married filing jointly, you can use Form 1040 or Form 1040A. If you have no dependents, are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Use the Married filing jointly column of the Tax Table, or Schedule Y-1 of the Tax Rate Schedules, to figure your tax.

Spouse died during the year.   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. See Spouse died during the year, earlier.

Divorced persons.   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status.

Filing a Joint Return

Both you and your spouse must include all of your income, exemptions, and deductions on your joint return.

Accounting period.   Both of you must use the same accounting period, but you can use different accounting methods.

Joint responsibility.   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

Divorced taxpayer.   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns.

Relief from joint responsibility.   In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse which were incorrectly reported on the joint return. You can ask for relief no matter how small the liability.

There are three types of relief available.

1. Innocent spouse relief, which applies to all joint filers.
2. Separation of liability, which applies to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date election of this relief is filed.
3. Equitable relief, which applies to all joint filers who do not qualify for innocent spouse relief or separation of liability and to married couples filing separate returns in community property states.

You must file Form 8857, Request for Innocent Spouse Relief, to request any of these kinds of relief. Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them.

Signing a joint return.   For a return to be considered a joint return, both husband and wife must generally sign the return.

Spouse died before signing.   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and print Filing as surviving spouse in the area where you sign the return.

Spouse away from home.   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time.

Injury or disease prevents signing.   If your spouse cannot sign because of injury or disease and tells you to sign, you can sign your spouse's name in the proper space on the return followed by the words By (your name), Husband (or Wife). Be sure to also sign in the space provided for your signature. Attach a dated statement, signed by you, to the return. The statement should include the form number of the return you are filing, the tax year, the reason your spouse cannot sign, and that your spouse has agreed to your signing for him or her.

Signing as guardian of spouse.   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian.

Spouse in combat zone.   If your spouse is unable to sign the return because he or she is serving in a combat zone (such as the Persian Gulf Area, Yugoslavia, or Afghanistan), or a qualified hazardous duty area (such as Bosnia and Herzegovina, Croatia, and Macedonia), and you do not have a power of attorney or other statement, you can sign for your spouse. Attach a signed statement to your return that explains that your spouse is serving in a combat zone. For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, get Publication 3, Armed Forces' Tax Guide.

Other reasons spouse cannot sign.   If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Attach the power of attorney (or a copy of it) to your tax return. You can use Form 2848.

Nonresident alien or dual-status alien.   A joint return generally cannot be filed if either spouse is a nonresident alien at any time during the tax year. However, if one spouse was a nonresident alien or dual-status alien who was married to a U.S. citizen or resident at the end of the year, the spouses can choose to file a joint return. If you do file a joint return, you and your spouse are both treated as U.S. residents for the entire tax year. See chapter 1 of Publication 519.

Married Filing Separately

You can choose married filing separately as your filing status if you are married. This method may benefit you if you want to be responsible only for your own tax or if this method results in less tax than a joint return. If you and your spouse do not agree to file a joint return, you may have to use this filing status.

If you live apart from your spouse and meet certain tests, you may be considered unmarried and may be able to file as head of household. This can apply to you even if you are not divorced or legally separated. If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. See Head of Household, later, for more information.

Unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). This way you can make sure you are using the method that results in the lowest combined tax. However, you will generally pay more combined tax on separate returns than you would on a joint return because the tax rate is higher for married persons filing separately.

How to file.   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions on your individual return. You can claim an exemption for your spouse if your spouse had no gross income and was not the dependent of another person. However, if your spouse had any gross income or was the dependent of someone else, you cannot claim an exemption for him or her on your separate return.

If you file as married filing separately, you can use Form 1040A or Form 1040. Select this filing status by checking the box on line 3 of either form. You must also enter your spouse's social security number and full name in the spaces provided. Use the Married filing separately column of the Tax Table or Schedule Y-2 of the Tax Rate Schedules to figure your tax.

Special Rules

Special rules apply if your filing status is married filing separately.

Community property states.   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. See Publication 555, Community Property.

Deductions, credits, and certain income.   If your filing status is married filing separately:

1. You should itemize deductions if your spouse itemizes deductions, because you cannot claim the standard deduction.
2. You cannot deduct interest paid on a qualified student loan.
3. You cannot take the credit for child and dependent care expenses in most cases, and the amount that you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 if you filed a joint return). For more information about these expenses, the credit, and the exclusion, see Publication 503, Child and Dependent Care Credit.
4. You cannot take the earned income credit.
5. You cannot exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses.
6. You cannot take the credit for the elderly or the disabled unless you lived apart from your spouse for the entire year.
7. You cannot take the education credits (the Hope credit and the lifetime learning credit).
8. You cannot take the exclusion or credit for adoption expenses in most cases.
9. You will become subject to the limit on the child tax credit, the limit on itemized deductions, and the phaseout of the deduction for personal exemptions at income levels that are half of those for a joint return.
10. You may have to include in income more of your social security benefits (or any equivalent railroad retirement benefits) than you would on a joint return. For information on social security and railroad retirement benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits.
11. You cannot roll over amounts from a traditional IRA into a Roth IRA during the year, unless you did not live with your spouse at any time during the year.
12. Your capital loss deduction limit is $1,500 (instead of $3,000 if you filed a joint return).
13. You cannot claim the credit for contributions to certain qualified plans, including IRAs (discussed next), if your adjusted gross income is more than $25,000 (instead of $50,000 if you filed a joint return).

Individual retirement arrangements (IRAs).   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Your deduction is reduced or eliminated if your income is more than a certain amount. This amount is much lower for married individuals who file separately and lived together at any time during the year. For more information, see How Much Can I Deduct? in Chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). For more information on the credit for contributions to an IRA, see Chapter 5 of Publication 590.

Rental activity losses.   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to $25,000. This is called a special allowance. However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. See Rental Activities in Publication 925, Passive Activity and At-Risk Rules.

Joint Return After Separate Returns

You can change your filing status by filing an amended return using Form 1040X.

If you or your spouse (or both of you) file a separate return, you generally can change to a joint return any time within 3 years from the due date of the separate return or returns. This does not include any extensions. A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status.

Separate Returns After Joint Return

Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return.

Exception.   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. The personal representative has 1 year from the due date of the return to make the change. See Publication 559 for more information on filing income tax returns for a decedent.

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