Change my tax filing status, or...?

[northerndynasty]

Sooo...it's finally happened - my now 22-year-old only child has graduated college, begun her amazing career, and I'm on my own!  Still trying to realize it all!!

For the last 22 years I've had my tax status as: Head of Household, 1 dependent.  It's been to my benefit all-along.  But am I REQUIRED to, or SHOULD I, change my status now to Single?

I ask this, because, my thought process is:  if I LEAVE my status as the same, and I don't have "enough" income taxes taken out by the end of the year (I am still a very-young 51 year old full-time employed), should I not take advantage of the deficit to actually INCREASE my end-of-year IRA contribution to OFFSET what I would've owed in taxes (when using TT doing a mock return BEFORE I actually file)?  Liking this to forced-retirement contributions, instead of giving the money over to taxes?
 
Thoughts?

Thank you!

[Vanessa A]

It depends on your income and goals. As a single person with no dependents, you will have a higher tax liability and fewer if any credits to lower your tax liability. 

If you do not have enough taken out, then you will also be subject to a penalty on the underpayment.  

However, your maximum IRA contribution is $8,000.  The difference between the standard deduction and head of household for 2025 is $7,500.  So in reality, this could be the difference in the offset, between your contribution and your lower deduction.  This would be a form of tax planning if you choose to do so.

 There is no rule that says you MUST change your W4 to single. 

 

[northerndynasty]

Vanessa:

Many thanks for responding to my posting!  Surely appreciate the info.

When I saw your mentioning about the "underpayment penalty", I of course stopped - and had to look that up.  I'm seeing that mostly affects "quarterly" payers.  As I am working for an employer, my taxes are taken out each paycheck and then I file annually.  I'll make sure that I use TT to draw up a mock return before I actually file it, to see where the numbers are, and then make that "end of year" IRA contribution before I actually file.  I'm suspecting that will negate any penalty (or you can confirm my suspicions?)

Again, thanks for the information and what seems to be a supporting response to my thought process! 

[ThomasM125]

For the most part, you will not be penalized for late payment of tax if you owe less than $1,000 in taxes when you file your tax return. If your end of year IRA contribution reduces your tax due to $1,000 or less you should not face a penalty for late payment of tax.

[northerndynasty]

Thank you, Thomas!!  I appreciate the info!

My plan is to do a "mock" return on TT to see where the numbers are, and then BEFORE filing, make a contribution to my IRA that will essentially eliminate any owing of taxes for under-withholding through the year.  I don't earn a tremendous amount, but I'm certain I'll probably have something that will require a pre-filing IRA contribution that should help.

Again, thanks a bunch!  Take care!