Your Home Is Your Castle! But, Are You Really The Head Of Household According To The IRS?

4/16/2020

Lots of people are confused about this tax filing status. It has some nice benefits for those who qualify as Head of Household, but who exactly qualifies? Let's break it down.

First, what is Head of Household?

Head of Household is a tax filing status for single or unmarried taxpayers who keep up a home for a Qualifying Person.

Benefits of being Head of Household

The “Head of Household” filing status has some important tax advantages over the Single filing status. If you qualify as Head of Household, you will have a lower tax rate and a higher standard deduction than a Single filer.  Also, Heads of Household must have a higher income than Single filers before they owe income tax.

Claiming “Head of Household” as your filing status versus filing as single or married filing separately benefits you in two ways. First, it can help you to snag a lower tax rate. For tax year 2023, for example, the 12% tax rate applies to single filers with an adjusted gross income that's between $11,000 and $44,725. If you file head of household, however, you can earn up to $59,850 before being bumped out of the 12% tax bracket. That's a nice benefit.

In addition, Head of Household filers benefit from a higher standard deduction. For the 2023 tax year, the deduction for single filers is $13,850, but it climbs to $20,800 for those filing Head of Household. Deductions reduce your taxable income for the year, which can bring your tax bill down or bump up the size of your refund.

Read more: The Earned Income Tax Credit: What Is It And Who Qualifies?

Who Qualifies for Head of Household – 3 Qualifiers?

1. First, you have to be unmarried or considered unmarried on the last day of the tax year. The IRS considers you unmarried if you are single, divorced or legally separated. Your spouse can't have live with you during the last six months of the tax year and you need to file separate tax returns. A temporary separation won't count towards Head of Household status.

2. Next, you need to have paid more than half the costs of keeping up a home for the year. That includes your rent or mortgage payment, property taxes, utilities, repairs, maintenance and groceries. Receiving child support or alimony doesn't prevent you from claiming Head of Household as long as you're paying more than 50% of your household costs from your own income or savings.

3. Finally, you need to have a qualifying dependent living in the home with you for more than half the year. This is usually a child. A qualifying child is your biological child, stepchild, foster child, sibling, step sibling, half sibling or a descendant of one of these. The child also needs to be under the age of 19 (or under the age of 24 if a full-time student). You can also claim these familial relatives as your qualifying dependent, if the person is permanently and significantly disabled, regardless of their age.

Beyond the Basics: Who is Considered Unmarried?

There are cases where a person is still legally married, but lives separately from their spouse, who provides little or no support. Even if you are still legally married, you may be considered unmarried for the purposes of the Head of Household. Let's explore two examples.

What if…. Temporary Absence of Spouse

You are still considered to have lived with your spouse in your home if you only lived apart due to temporary absences. A temporary absence includes living away from the home for the purposes of school, business, military service, medical treatment, or vacation, with the expectation of returning to the home after the absence.

What if… Nonresident Alien Spouse

You can be considered unmarried (single) for the purpose of filing as Head of Household if your spouse was a nonresident alien anytime during the year and you do not choose to treat them as a resident alien for tax purposes. But, you are considered married if you choose to treat your spouse as a resident alien on your tax return.

Read more: 5 Options For Paying Your Tax Debt…When You Can't Afford It.

Who is a qualifying dependent?

You must be able to claim the child as a dependent, however, you won't be able to claim the child as a dependent if their other noncustodial parent is claiming that child using the family law rulings.

A qualifying dependent is someone who lived with you in your home for more than half the year, not counting temporary absences. Many dependents will count as a Qualifying Person for Head of Household, but some dependents will not. To qualify for Head of Household statement, the dependent must be a relative of yours.  For example, your boyfriend's child will not qualify, even if you provide over 50% of their care because they are not a relative of yours.

A Qualifying child who is single.

A Qualifying Child who is married, as long as you can claim them as a dependent. (They can still be your Qualifying Person if the only reason you cannot claim them is that you can be claimed as a dependent on someone else's return).

Your mother or father, if you can claim them as a dependent.

What if…Temporary Absence of your dependent

If you or your Qualifying Person were temporarily absent from your home, you are still considered to have lived together in the home. An acceptable temporary absence includes living away from the home for the purposes of school, business, military service, medical treatment, or vacation. You or your Qualifying Person must be expected to return to the home after the absence, and you must have kept up the home during the absence.

Note, if your Qualifying Person was born or died during the year, they are still considered to have lived with you for the entire year as long as you paid more than half of the cost of keeping up the home during the time your that they were alive.

What if… Your parent is Your Qualifying Person

If you support your mother or father, but they lived in a home for the elderly, you may still be able to claim them as a Qualifying Person for the Head of Household filing status. You must have paid more than half the cost of keeping up the home in which they lived for the entire year. If your parent lived in a nursing home for example, you are considered to have kept up their main home, if you paid more than half of the cost of them living there.

Costs of Keeping up a Home

To figure out if you paid more than half the cost of keeping up a home, you must first determine the total cost. All of the following expenses should be included when determining the total cost of keeping up a home:

Rent
Mortgage interest
Insurance
Property taxes
Utilities
Repairs and maintenance
Food eaten in the home
Other household expenses

Once you figure the total cost, simply take half of the number and compare the result to your actual expenses to see if you paid more.

What if… Multiple People Pay the Cost of Keeping up a Home

If you paid more than half the cost of keeping up a home or if you paid a greater portion of the total cost than anybody else did, even if you actually paid less than half of the total cost you can claim Head of Household status.

What if… Public Assistance

If you paid any costs of keeping up your home with funds received from TANF (temporary assistance for needy families) or other public assistance programs, you may not include those amounts in the expenses you paid. However, you must still count these expenses toward the total cost of keeping up a home.

This filing status can be confusing for some people, but if you pay more than 50% of living expenses for a relative dependent, then more than likely you can claim the benefits of being head of household.

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