Posted by James Financial Services Inc

The implication of Head of Household Filing Status for Your Taxes

The implication of Head of Household Filing Status for Your Taxes

The head of household filing status confuses taxpayers compared to any other IRS terms. This is not surprising as the head of filing signifies the breadwinner and the provider of the home. It is, however, not that simple. The IRS has many rules that determine if you merit that term - head of household. 

Without a doubt, this is an impressive status that can reduce your tax saving. You, however, need to follow the IRS guidelines to avoid an audit. Here are some requirements on who is eligible for this filing status. The person has to:

  • Be Unmarried

  • Foot more than half of the bill for supporting your household

  • Be living together with other qualifying members, and you must be responsible for over half of their support. Brothers, sisters, dependent children, and grandparents are examples of qualifying members.

You must meet all these requirements to qualify for head-of-household filing status.


Regulations for Married Taxpayers

You cannot claim head-of-household filing status while married. You must be single or in a divorce process. Uncle Sam's single definition includes single, living apart from the spouse for more than six months and separated by divorce. 

A Note on Dependents

Another requirement is to be responsible for at least 50% of a dependent's care, such as child, step-parent, step-siblings, brothers, sisters, half-relative, etc. You are better off with supporting documentation to prove your claim as Uncle Sam will require this.


Impressive Financial Benefits for Heads of Household

There are impressive financial benefits that the head of household filing status qualifier will enjoy. In addition to a favorable tax rate, there is the possibility to claim a higher standard deduction on filing taxes.

For instance, the head of the household enjoys as much as $18000 as standard deduction while single filers enjoy only $12,000. A Whooping difference of $6000 is impressive. 

Qualifying Child Tests

A child must meet the following tests to qualify 

  • Relationship Test: The kid must be your child, stepchild, foster child, siblings, half or step-sibling, niece, nephew or adopted to pass this test

  • Age Test: The kid must be younger than you and less than 19 years at the end of the year. A child in college might qualify till age 24. A permanently disabled kid enjoys permanent qualification no matter the age.

  • Residency Test: The kid must have lived with you for more than six months. We, however, have some cases where the kid could still qualify without residing with you. 

  • Joint Return Test: For people with a married qualifying child, there is no possibility of having a joint return with the spouse, except it was claimed as a refund of estimated tax that was paid.


Qualifying Relative Tests

There are cases when you do not have a kid that meets the status of a dependent. You might, however, have a family member that stayed with you for more than six months. 

There is no age limit on qualifying relatives to meet the dependent status that can help you are eligible for head of the household status. They, however, must meet the following four tests:


  • Not-a-Qualifying-Child test: The person is a relative that does not qualify as your child and the child of another taxpayer.

  • Gross Income test: The relative cannot have a gross income of $4,050 or more for a year. Income includes property, money, and services contained in taxes.

  • Relationship or Member-of-Household test: Anyone staying under your roof for a whole year can pass this test, even if they are not members of the family. A child, stepchild, or foster child can also meet this test if they did not live with you all year round. The law also applies to other relatives like siblings, grandkids, grandparents, step-parents, aunts, uncles, nieces, and nephews.

  • Support Test: More than half of the needed support for the person must come from you during the year to meet this test. 

The Bottom Line

Make sure to check the guidelines presented by the IRS before claiming the head of the household status. This can help you avoid an audit in the future. Even if you consider yourself as head of household, your definition might differ from what the IRS has in mind. 


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