Claiming Head of Household Filing Status
Filing as head of household depends on three complicated criteria
The Internal Revenue Code offers five different filing status options, and you must choose one of them when you complete your tax return. The head of household status is considered to be the most advantageous. Taxpayers who qualify as head of household get a higher standard deduction and wider tax brackets compared to the single filing status, but numerous rules apply to qualifying.
You must be unmarried or "considered unmarried" at the end of the year and you must have paid more than half the cost of maintaining your home for the year. You must have one or more qualifying dependents.
Head of Household Tax Rates and the Standard Deduction
Your filing status determines the amount of your standard deduction, as well as the tax rates you'll pay on your income. The head of household standard deduction for 2018 is $18,000. Contrast this with single filers and married individuals who file separate returns—they can claim only a $12,000 standard deduction. Married taxpayers who file joint returns get a $24,000 deduction, but this works out to one $12,000 deduction for each of them, just as though they were single.
This table shows the tax rates that apply to head of household filers for the year 2018.
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Each segment of your income is taxed at the applicable bracket or percentage rate.
The Unmarried Test
Normally, a taxpayer must be unmarried on the last day of the year to file as head of household. This means that you're single, divorced, or legally separated under a separate maintenance decree issued by a court. You can be "considered unmarried" if you're still legally married but you lived in a separate residence from your spouse for at least the last six months of the year—from July 1 through the end of December.
You must file a tax return separate from your spouse and you must still meet the other two criteria for head of household status: the support test and the qualifying dependent test.
The Support Test
The support test requires that you must provide more than half the cost of keeping up your home for the year. Qualifying costs includes expenses like rent or mortgage interest payments, property taxes, property insurance, repairs, utilities, and groceries. Taxpayers can use Worksheet 1 in Publication 501 to determine if they meet the support test.
Costs associated clothing, education, medical care, vacations, life insurance, and transportation do not count.
This doesn't necessarily mean that you have to be the only adult living in your household. You can have a roommate to help defray costs, but you must personally pay at least 51 percent of the household expenses. You won't qualify for head of household if you scissor expenses neatly and exactly down the middle.
Income received from public assistance programs such as Temporary Assistance for Needy Families doesn't count toward financial support provided by a taxpayer for purposes of qualifying for head of household filing status. If you used funds from any of these sources, you can't include it as money you personally paid toward supporting your household.
The Qualifying Dependent Test
A qualifying person must live in your home for more than half the year, and this is the most complicated rule of all. Only certain closely-related relatives can be qualifying persons for the head of household filing status. They include:
- Your child, stepchild, adopted child, foster child, brother, sister, or a descendant of one of these individuals whom you claim as a dependent under the qualifying children rules
- Your child, stepchild, adopted child, foster child, brother, sister, or a descendant of one of these individuals whom you would be eligible to claim as a dependent under the qualifying children rules but have elected not to claim as a dependent because you released the dependent's exemption to the noncustodial parent
- Your mother or father who can be claimed as your dependent under the qualifying relative rules
- Your brother, sister, grandparent, niece, or nephew whom you can claim as a dependent under the qualifying relative rules.
The IRS provides a well laid-out chart regarding qualifying persons in Table 4 of Publication 501.
Two Exceptions to the Residency Rule
A taxpayer and his qualifying dependent are considered to reside in the same household during periods of temporary absence due to "illness, education, business, vacation, or military service," according to the IRS. The rule is that it's "reasonable to assume the absent person will return to the home after the temporary absence. You must continue to keep up the home during the absence."
In other words, if your child lives away at school for a portion of the year, he still qualifies.
There's also a special exception for people who support their dependent parents. A parent can be a qualifying person for purposes of meeting the residency test even if she doesn't reside in your home, as long as you can claim her as your dependent and you meet the support test.
"If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. However, you must be able to claim an exemption for your father or mother. Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother.
"You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly," according to the IRS in Publication 501.
Tools for Determining Filing Status
The IRS has a filing status application on their website called What is My Filing Status? This web application takes about five minutes to complete and it can help you determine the filing status for which you qualify. Most tax preparation software will ask you a series of questions and determine your filing status for you.