Head of Household

What Is The Head of Household?

A head of household is typically an unmarried taxpayer who pays more than half the cost of maintaining their household.

Someone who has dependents often qualifies. Parents who are unmarried, divorced, or legally separated as of the final day of the year may file as head of household if they have custody. In rare cases, it could refer to an adult providing support to a parent or other relative.

Determining if filing your taxes this way makes sense for you can be challenging. See a financial professional for assistance.

The head of household filing status provides tax benefits to unmarried or separated individuals with dependents. Taxpayers who qualify as Head Of HouseHold are awarded higher standard deductions and lower tax rates.

This status is beneficial compared to single or married taxpayers filing separately.

Who Can File as a Head of Household?

The IRS has three requirements you must fulfill to be considered the head of household (Head Of Household). The following three conditions must be satisfied in order for you to be eligible.

You’re Not Married

To begin with, you must be single on the last day of the tax year or be regarded as unmarried. The IRS will regard you as single if any of the following applies to you.

• You're either legally separated or divorced. 
• For the final six months of the year, your spouse did not reside with you. 
• You lived apart from your spouse for the last six months of the year and filed separate tax returns. 

For tax reasons, the IRS will treat you as married if your separation is only brief. Relocating to a medical treatment center, attending college, or serving in the armed forces are examples of qualifying temporary separations.

You Pay the Bills

Secondly, you must have covered over half of the residence's annual maintenance expenses. This covers your electricity, property taxes, groceries, repairs, upkeep, and rent or mortgage.

Items like clothes, life insurance, and transportation are not allowed to be included. You can still be the head of the home if you're covering more than 50% of your expenses out of your own salary or savings, and you're not receiving alimony or child support.

The IRS may view payments for alimony or separate maintenance as the recipient's income. The relevant regulations changed in 2018; thus, it matters when you receive your divorce.

The best way to find out exactly how the most recent tax laws relate to your particular circumstances is to speak with a tax expert.

Qualifying Dependent

Lastly, a qualifying dependant must reside in the same residence as you for more than half the year.

A child often qualifies as a qualifying dependent for those filing as head of household. Your biological child, stepchild, foster child, sibling, step-sibling, half-sibling, or descendant of one of the aforementioned relatives can all be considered qualified children.

In addition, the youngster must be younger than 19 (or younger than 24 if enrolled full-time in school). Regardless of age, if the relative is completely and permanently incapacitated, you may also be eligible to identify them as your qualified dependent.

However, if the dependent is a sibling, their gross income must not exceed $4,700, and they must be younger than you.

A parent, stepparent, niece, nephew, aunt, uncle, daughter, son, mother, or father-in-law are examples of additional non-child-qualified dependents.

It should be noted that you are able to claim your parents as a dependent even if they do not reside with you, provided that you cover half of their housing expenses, including those incurred if they are in a nursing facility.

The same applies to a child away at college. Once more, their gross incomes cannot exceed $4,700.

Advantages of Filing as Head of Household

Claiming “head of household” as your filing status (instead of filing individually if you're married or single) gives you two advantages. 

1. You shall receive a reduced tax rate. For tax year 2023, individuals filing as singles and having an adjusted gross income between $11,000 and $44,725 are subject to a 12% tax rate.
   However, if you file as a head of household, you can make an income of $15,700 to $59,850 before going above the 12% tax bracket.
2. The larger standard deduction also benefits filers who are head of household. The deduction for single filers in the 2023 tax year is $13,850.
   However, for individuals filing as head of household, it increases by a little over 50% to $20,800. By lowering your taxable income for a year, deductions can either lower your tax liability or increase your refund amount.

Filing as Head of Household: Guidelines and Scenarios

Consider the IRS guidelines carefully when determining if you can file as head of household, especially regarding dependent qualifications and home cost responsibilities.  Let's explore the scenarios for filing as head of household.

Can I File as Head of Household If I Live With My Significant Other?

Unmarried with Children from Previous Relationships:

• Both can file as heads of household if they meet IRS guidelines.
• Each must pay for more than half of their home costs (e.g., splitting rent and utilities, paying for their own food).

With a Child Together:

• Only one can claim head of household status with that child as a dependent, per IRS rules.

One Parent with a Child from a Previous Relationship:

• The biological parent can claim Head of Household status.
• If the biological parent is not working, the earning partner can claim Head Of Household status if:
  • They provided more than half of the support for the year
  • The dependents lived with them legally for the entire year
  • The dependents' gross income did not exceed $4,700
  • The dependents are not someone else’s qualifying child

Can I File as Head of Household If There Are No Children?

You can claim a live-in significant other as a qualifying dependent if:

• They lived with you legally for the entire year
• You provided more than half of their total support for the year
• Their income does not exceed $4,700
• They are not someone’s qualifying child

Can I File as Head of Household If I’m Married?

You can file as head of household even if married if:

• Your spouse did not live with you for the last six months of the year
• You provided the main home for the qualifying child and paid more than half the home costs
• You are claiming your child as a dependent

Important Consideration

You should take several things into account before filing as head of household:

• It might be more beneficial tax-wise to file jointly if you are married
• Analyze your personal situation and that of your spouse before deciding on your filing status

Conclusion

A head of household is an unmarried taxpayer who provides more than half of their income to cover the expenses of every member of their home.

You will be placed in a reduced tax bracket if you file as head of household as opposed to single. You can also use it to increase the standard tax deduction. This is a deduction that you can claim on your tax return.

This is a result of your assistance to one or more individuals, in addition to yourself.

As a result, you will pay less in taxes overall, just as married couples with kids do. Because of this, the head-of-household decision can be a very advantageous tax position in the appropriate circumstances.

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