Married Taxpayer, Filing as Unmarried Head of Household, May Use Full Standard Deduction

Two taxpayers are legally married at the end of the tax year. They do not elect to file a joint return. One taxpayer qualifies to file as an unmarried head of household; the other files as married filing separately.

Issues

If a married taxpayer who files as a head of household itemizes deductions, may the taxpayer's spouse claim the full standard deduction for married taxpayers filing separately? In addition, if the spouse who files as married filing separately elects to itemize deductions, may the spouse who files as head of household claim the standard deduction for head of household status?

Analysis

Several provisions of the Code set forth circumstances in which an individual who is legally married may not be considered married. The general rule in Sec. 7703(a) provides that an individual legally separated from his spouse under a decree of divorce or of separate maintenance would not be considered married. Under Sec. 7703(b), an individual who is married shall not be considered married if (1) an individual maintains as his home a household which constitutes, for more than half of the tax year, the principal place of abode of a child for which such individual is entitled to a deduction for the tax year, (2) such individual furnishes over half of the cost of maintaining such household during the tax year and (3) during the last six months of the tax year, such individual's spouse is not a member of such household.

Sec. 63(c)(6)(A) and (g) provide for another situation in which an individual who is married may be considered not married, providing that the marital status of an individual is also determined under Sec. 7703 when applying the limit as to the eligibility to take the full standard deduction when filing a separate return.

The principle of treating a married individual as unmarried in certain situations also applies to the tax tables set forth in Sec. 1. In general, a married individual may file a joint return with his spouse under Sec. 1(a), or file a separate return under Sec. 1(d) and pay the tax imposed on taxable income in accordance with the tables set forth therein. However, a married individual may also have an additional choice of filing status under Sec. 1(b) if he is a head of household (as defined in Sec. 2(b) and (c)). Although Sec. 2(b) specifically refers to an individual who is not married to be considered for head of household status, Sec. 2(c) provides that an individual shall be treated as not married at the close of the tax year if such individual is so treated under the provisions of Sec. 7703(b). Thus, legally married individuals may also use head-of-household filing status, as long as they satisfy the Sec. 2(b) and 7703(b) requirements. If a legally married individual uses the head-of-household filing status, the status of the other spouse continues as a married individual filing separately under Sec. 1(d).

Next to be considered is the relationship of one spouse filing as head of household and the other spouse married filing separately with the eligibility of the spouses to use the standard deduction and the right to elect to itemize deductions. Sec. 63(e)(1) provides, in general, that unless an individual makes an election under this subsection for the tax year, no itemized deduction shall be allowed for the tax year. Sec. 63(b) provides in part that, if an individual does not elect to itemize his deductions, adjusted gross income is instead reduced by the standard deduction. This right of a taxpayer to elect to itemize deductions or use the standard deduction is generally limited by Sec. 63(c)(6)(A), which provides that a married individual filing a separate return in which either spouse itemizes deductions shall have a standard deduction of zero. This limit then applies to married individuals filing separately under Sec. 1(d), but does not apply to a spouse who qualifies for and files as head of household (because the spouse with head-of-household status is not considered a married individual under Sec. 7703(b)). Therefore, a spouse who filed as head of household may use the full standard deduction and is not limited under Sec. 63(c)(6)(A) by the other spouse's election to itemize deductions. Also, if the head-of-household spouse elects to itemize deductions, the general limit of Sec. 63(c)(6)(A) continues to apply to the other spouse, because the other spouse is a married individual filing separately.

Page 5 of IRS Publication 501, Exemptions, Standard Deduction, and Filing Information, discusses spouses who elect to file separately and how one spouse may be able to file as head of household if the spouses live apart and meet certain tests. In that discussion, there is also a statement that provides that head-of-household filing status allows a taxpayer to choose the standard deduction, even if the taxpayer's spouse chooses to itemize deductions.

Conclusion

If a married individual files a separate return with head-of-household status and elects to itemize deductions, and if the other spouse continues to file as married filing separately, that other spouse is not eligible for the full standard deduction. Second, if the other spouse who files separately elects to itemize deductions, the spouse who files a separate return with head-of-household status may still use the full standard deduction available for head-of-household status.

IRS Letter Ruling 200030023 (6/27/00)