Tax status refers to an individual's or entity's classification for tax purposes, which determines how much tax they owe. This classification can depend on various factors, including income level, filing status, and the type of income earned. Common tax statuses include single, married filing jointly, and head of household. Understanding your tax status is important because it affects the tax rates and deductions you can claim. For example, single filers may have different tax brackets compared to married couples. Knowing your tax status helps ensure compliance with tax laws and can optimize your tax benefits.