There is no tax filing status that confuses taxpayers more than that of head of household. When you hear the term, what comes to mind? The breadwinner? The main source of household income? To the IRS, it's not that simple. There are many rules that are a part of filing your taxes under head of household status. While this status can maximize your tax savings, you must ensure that you follow IRS guidelines fully in order to avoid a potential IRS inquiry or audit. Here is a look at what filing as head of household means for your taxes and whether you might be eligible to file under this status.
The Guidelines for Filing as Head of Household
In order to file as head of household, you must meet several requirements. First, you must be unmarried, pay more than half of the costs of supporting your household and live with other qualifying family members for whom you provide support for more than half of the year. Some examples of qualifying family members include a dependent child, grandchild, brother, sister, grandparent or anyone else you can claim as an exemption. If you do not meet all of these requirements, you are not eligible to claim head of household as your filing status.
Stipulations for Married Taxpayers
Married taxpayers are not eligible to claim head of household status, as either you must be single or in some stage of a separation. According to the IRS, you are considered unmarried if you are single, legally separated by divorce or have lived apart from your spouse for six months or more in the calendar year.
Filing Your Taxes As Head of Household
A Note on Dependents
In order to file as head of household, you must provide at least 50% of the care received by a dependent such as a child, parent, brother, sister, step-parent, step-sibling, foster child, half-relative or any other relative for which you can claim an exemption. It is wise to have supporting documentation to prove your claim, should the IRS inquire for further information.
Significant Financial Benefits for Heads of Household
If you qualify for head of household filing status, there are significant financial benefits in store for you. Not only will you receive a much more favorable tax rate than you would if you were to file as a single taxpayer, but taxpayers who file as head of household can claim a much higher standard deduction when filing their taxes. The standard deduction for head of household is $18,000, while the standard deduction for taxpayers filing as single amounts to $12,000, a difference of $6,000.
The Bottom Line
Prior to filing as head of household, be sure to review the IRS guidelines carefully to avoid an audit or hard inquiry in the future. While you may consider yourself as the head of your household, your definition and the IRS's definition may vary significantly. Most questions regarding the head of household filing status can be found online at irs.gov, or you can call the Internal Revenue Service at 1-800-829-1040.