One of the first things you’ll need to decide when you’re getting ready to do your taxes is which filing status you’ll use. If you have dependents, you may be eligible to file as the head of your household. That can potentially keep more money in your pocket. Not everyone can claim head of household, however, so you need to be clear on what the rules are before you file.
Who Can File Head of Household?
There are three specific guidelines the IRS expects you to meet to qualify as head of household.
First, you have to be unmarried or considered unmarried on the last day of the tax year. The IRS considers you unmarried if you meet the following criteria:
- You’re single, divorced or legally separated.
- Your spouse didn’t live with you during the last six months of the year.
- You and your spouse file separate tax returns.
If the circumstances of your separation are temporary, the IRS will consider you married for tax purposes. Qualifying temporary separations include military deployment, staying in a medical treatment facility or going to college.
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. You can’t include things like clothing, life insurance or transportation. 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.
Finally, you need to have a qualifying dependent living in the home with you for more than half the year. For many people who file as head of household, their qualifying dependent is 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 relatives as your qualifying dependent if the person is permanently and totally disabled, regardless of age.
Other non-child qualifying dependents include a parent, step parent, niece, nephew, aunt, uncle and daughter-, son-, mother- or father-in-law. Note that you can claim a parent as your dependent even if the parent doesn’t live with you. The same is true for a child who is away at college.
If the qualifying person who lives with you has income, they can’t have provided more than half the cost of their care for the year.
What Are the Advantages of Claiming Head of Household?
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 2018, for example, the 12% tax rate applies to single filers with an adjusted gross income that’s between $9,526 and $38,700. If you file head of household, however, you can earn up to $51,800 before being bumped out of the 12% tax bracket.
Head of household filers also benefit from a higher standard deduction. For the 2018 tax year, the deduction for single filers is $12,000, but it climbs to $18,000 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.
As you think about filing, it’s important to remember that the 2018 tax year is what you need to file by April 2019.
Filing Head of Household When You Live With Someone
If you’re single or separated but you live with someone else, it’s still possible to file head of household as long as you’re adhering to the IRS guidelines. For example, if you have a roommate and each of you has a child, you both might be able to claim head of household if you meet the IRS requirements and you’re each paying more than 50% of your own household expenses. That doesn’t mean, however, that you can claim a boyfriend or girlfriend as a dependent if you’re supporting them financially.
Filing as head of household when you’re not actually eligible to do so can lead to problems if the IRS decides to take a closer look at your tax return. If you’re in doubt about whether you qualify, it’s best to add talking to a tax professional to your to-do list before you start working on your return. If you’re looking for a trusted financial expert to assist you with your tax matters, check out our financial advisor matching tool to get paired up with a professional who meets your specific needs.
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