Based on Uncle Sam's definition and the purpose of taxes, a head of household is a single taxpayer with dependents and is responsible for over half of their care and home cost. This status can be an adult who is supporting a relative or parent in some condition. These specific conditions might be confusing, and the situation of people might not be easy to understand.
What about the death of your spouse when the sole responsibility of raising the kids lies on you? You might be confused if joint filing or head of household status is the best approach?
It is essential to know if you qualify for head of household status because it will bring down your tax bill. This article will shed light on basic things one needs to know about such status.
Who can file the head of Household Status?
Uncle Sam puts forth three specific criteria one must meet to qualify as the head of household.
One needs to be single or unmarried as of the last day of the tax year (Dec 31). You are considered unmarried if you meet the following conditions:
You are legally separated or divorced.
You were away from your spouse for the last six months.
You and your spouse did not file a joint tax return.
You are still married for the purpose of tax if what separated you is temporary. Examples are college, military deployment, medical treatment, etc.
Over half of the responsibility of running a home should be on you. This includes things like utilities, rents, repairs, mortgage payments, groceries, and home maintenance. Other things like life insurance, clothing are not allowed.
There needs to be a qualifying dependent that lives in the same house with you for more than six months. This, most time, is the child who can be your biological kid, foster kid, stepchild, siblings, half-sibling, or relative. The child must be below 19 or below 24 if enrolled as a full-time student. Any total or permanently disabled relative also qualifies as a dependent, no matter the age. A dependent that is your sibling should be younger and have a gross income below $4,200.
One can claim a parent as a dependent even If you do not live together, provided half of their home's cost is on you. It does not matter if they are in a nursing home.
Advantages of Head of Household Filing Status
There are two significant ways you benefit when you claim the head of the household status.
You enjoy a lower tax rate which gives impressive savings on tax.
Also, your standard deduction will be higher. For 2021, the standard deduction amount is $18,800. This deduction brings down your taxable income, reduces what you send to Uncle Sam, and shoots up your refund.
Is Filing as Head of Household Possible Even if I live with my Partner?
If you are not married and you have kids from former relationships, the two parties can claim the head of household status provided all IRS guidelines are followed.
If both of you have a kid, only one person qualifies for the kid's head of household status. According to Uncle Sam, two-person cannot claim a child as a dependent.
However, if only one of you has a kid from a previous relationship, the natural parent qualifies for the HOH status, while the other qualifies for the single status. If the actual owner has no job, the earning Partner qualifies to claim the HOH status. The following must be satisfied to claim the kid and non-earning Partner as dependents that qualify:
You were responsible for over half of their full support in a year.
For the whole year, they stayed under your roof as family members.
None earned above $4,200 as gross income
No one is claiming any of them as a qualifying child or dependent.
If you file as head of household, your tax bracket will be lower compared to filing as a single. You also qualify to claim a more significant standard deduction on your return. This is due to the responsibility of the people that lie on you.
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