DEFINITION of 'Breadwinner'

A breadwinner is the primary or sole income earner in a household. Breadwinners, by contributing the largest portion of household income, generally cover most household expenses and financially support their dependents.

The term is based on the word "bread", which is slang for money.

BREAKING DOWN 'Breadwinner'

The term breadwinner is sometimes used to refer to single income families in which one of the members works to generate income and the other stays at home to care for dependents. In other situations, a household may be a dual income household but have only one breadwinner. In such cases, the breadwinner is the one with the more profitable and economically sound job, while the other income earner who may be working part time or can afford to leave the workforce is simply “earning,” but not necessarily a breadwinner.

Breadwinner as Head of Household

For tax purposes, a breadwinner may file his or her taxes as head of household. The Internal Revenue Service (IRS) defines a breadwinner as a single or unmarried taxpayer who pays at least 50% of the costs of supporting his or her household and lives with other qualifying family members for whom s/he provides support for more than half of the year. This means that the breadwinner must have paid more than half of the total household bills, including rent or mortgage, utility bills, insurance, property taxes, groceries, repairs and other common household expenses. Some examples of qualifying family members include a dependent child, grandchild, brother, sister, grandparent or anyone else you can claim as an exemption.

Head of households benefit from a lower tax rate. For instance, the 15% tax bracket applies to single filers with an adjusted gross income (AGI) that is between $9,326 and $37,950 for the tax year ended 2017. The 15% tax bracket for head of households applies to AGI that falls between $13,350 to $50,800. So, a head of household that earns $50,000 will pay 15% income tax, compared to the 25% s/he will pay on this income amount if s/he filed as a single individual.

For 2017, the head of household standard deduction was $9,350, higher than the $6,350 standard deduction single filers and married individuals who file separate returns can claim. Married taxpayers who file joint returns get a $12,700 deduction, which works out to $6,350 deduction for each of them, still well below the head of household amount.

Married Breadwinner Filing Jointly or Separately

Tax law was designed to benefit married couples with one main breadwinner and one stay-at-home spouse. If one spouse isn’t working or was starting a business and had losses, the couple will benefit when filing jointly. A married taxpayer who is the breadwinner of the household may choose to file taxes jointly with his or her spouse, rather than separately, to reduce the tax liability. A breadwinner may find that s/he falls in a higher tax bracket if s/he files taxes separately - the higher the tax bracket, the higher the tax bill.

From the table below, a breadwinner who earns $78,000 in annual income and files jointly with a stay-at-home spouse will pay 25%. If s/he chose to file separately, the tax rate applied to this income will be 28%.

Tax Rate

Married Filing Jointly

Married Filing Separately

10%

$0 - $18,650

$0 - $9,325

15%

$18,651 - $75,900

$9,326 - $37,950

25%

$75,901 - $153,100

$37,951 - $76,550

28%

$153,101 - $233,350

$76,551 - $116,675

33%

$233,351 - $416,700

$116,676 - $208,350

35%

$416,701 - $470,700

$208,351 - $235,350

39.6%

$470,701 or more

$235,351 or more

 

There are times when filing separately from a spouse makes the most sense, such as when one person has expensive costs related to deductions based on AGI. For instance, medical expenses can only be deducted to the extent that they exceed 10% of your AGI. If a spouse has high medical bills, the joint income might be high enough that the breadwinner may not be able to take advantage of that deduction, while filing separately might allow this deduction.

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