Can You File As the Head of the Household?

Who is eligible for head of household status? asks the person standing with two elderly people in front of a house that is half a house and half a bill of undetermined quantity. Due to the higher standard deduction and wider tax brackets, this status is regarded as the most advantageous for taxpayers. For the most part, you must demonstrate: You were either divorced or living apart from your spouse for at least the final six months of the tax year if you were single on the last day of the year. More than half of your household's expenses are covered by you. A dependent who qualifies must reside with you for more than half the year (certain restrictions apply to this rule). Your life circumstances determine your tax filing status. Your marital status is the most important variable. Other considerations include having dependents and being married but having lost your spouse. The Internal Revenue Code provides five alternatives for filing status. When you finish your tax return, you must pick one of them. The status of head of household is seen as the most favorable. The standard deduction is higher for these taxpayers. Additionally, compared to the single filing status, they are subject to more benevolent tax brackets. But there are a lot of requirements to qualify.

main points

The standard deduction is higher for head of household taxpayers than it is for single filers, and their tax brackets are also more favorable.
You must not be married, have at least one dependant who you support and who resides with you, and cover more than half of the cost of your home in order to qualify as the head of the household.
Even if you aren't yet formally divorced, according to a special IRS rule, if you didn't reside with your spouse at any point after June 30 of the tax year, you are "considered" to be single.
Even if your elderly parents don't live with you, you may be eligible if you cover more than half of their housing costs.

How Do You File as the Head of Household?

A number of interrelated requirements, including your marital status, covering more than half of your household's expenses, and having a dependent, must be satisfied in order to qualify for the head of household status.

The Singles Test

In order to file as the head of a household, a taxpayer must be single on the last day of the tax year. This indicates that you are lawfully single, divorced, or separated as per a state court decree. However, if you're still legally wed but have lived apart from your spouse for at least the last six months of the year—specifically, from no later than July 1 through the end of December—you may be "thought" to be divorced. If you fall under the "considered" unmarried rule, you must file a separate tax return from your spouse and still satisfy the other two requirements for head of household status.

A Test of Support

In order to pass the support test, you must provide more than half of the annual maintenance costs for your home. Rent and mortgage interest payments are examples of qualifying charges, but not the principal balance of your mortgage payments. Paying back your debt is that portion. They include real estate taxes, homeowner's insurance, maintenance, utilities, and food. Sadly, expenses for clothing, education, healthcare, vacations, life insurance, and transportation are not taken into account for this test. This does not imply that there must be only one adult resident in your home. To help with costs, you can still share a room. However, you are required to cover at least 51% of the cost of living. If you split your spending exactly down the middle, you won't be considered the head of the home. Worksheet 1 in Publication 501 can be used by taxpayers to evaluate whether they satisfy the support test. Income from public assistance programs, such as Temporary Assistance for Needy Families, is not taken into account when determining whether a taxpayer is eligible for the head of household filing position. You cannot claim money from any of these sources as money you personally contributed to supporting your household.

Qualifying Dependent Test

An eligible dependent must spend more than half the year residing in your home. The complexity of this regulation may be the highest of all. Only a select group of close relatives are eligible to meet the head of household filing status requirements. They consist of: Your brother, sister, child you claim as a dependent under the qualifying child standards, stepchild, adopted child, foster child, or a descendant of one of these people. Your child, stepchild, adopted child, foster child, sibling, or descendant of one of these individuals whom you could claim as a dependent under the qualifying child requirements but have chosen not to do so. You granted the noncustodial parent the freedom to no longer claim the child as a dependent. In accordance with the qualifying relative requirements, your mother or father may be claimed as a dependent. Your sibling, brother, grandmother, niece, or nephew, as long as they meet the requirements for eligible relatives, whom you can claim as a dependent. In Table 4 of Publication 501, the IRS offers a well-drawn out chart of qualified individuals.

Tools for Checking the Status of Filings

On its website, the IRS offers an interactive file status feature. It is completed in around five minutes. It can aid in figuring out whether you are eligible for head of household status. Your filing status will also be determined by the majority of tax preparation software by asking you a series of questions.

The Heads of Household Standards Deduction

The amount of your standard deduction and the tax rates you'll pay on your income depend on your filing status. The standard deduction for the head of household in 2022 is $19,400, up from $18,800 in 2021. Compare this to married people who file separate returns and unmarried people who do not. In 2022, they can only deduct $12,950 as a standard deduction, up from $12,550 in 2021. In 2022, there will be a standard deduction of $25,900 for married taxpayers who file joint returns. However, this amounts to a $12,550 deduction for each of them, the same as if they were married.

Household Tax Rates Head

The tax rates that apply to head of household filers for the tax year 2021—your 2022 tax return—are displayed in the table below. Your income is taxed at the appropriate bracket or percentage rate for each component. Head of Household Tax Rates for 2021 Rate: Income: 10% from $0 to $14,200 $14,201 to $54,200, or 12% 22 percent increase from $54,201 to $86,350 $86,351 to $164,900, or 24% from $164,901 to $209,400, a 32% increase from $209,401 to $523,600, a 35% increase 38 percent Approximately $523,600 These income thresholds are also inflation-indexed, which results in a small rise for tax year 2022. Head of Household Tax Rates for 2022 Rate: Earnings: 10% between $0 and $14,650 12% between $14,651 and $55,900, or 12% from $55,901 to $89,050, by 22%. 24 percent increase from $89,051 to $170,050 from $170,051 to $215,950, a 32% increase $215,951 to $539,900, or 35% 38 percent in excess of $539,900. There is a reduction in the long-term capital gains tax rate for head of household payers. They don't switch to the 15 percent rate until their taxable income reaches $54,100 in the 2021 tax year. It is just $40,400 for other single filers and $80,800 for married filers filing jointly, which is twice as much as for other single filers. In 2022, this 15% cutoff will rise to $55,800.

Dispensations from the Law

When a taxpayer and their qualified dependents are absent temporarily for "sickness, education, business, vacation, or military service," the IRS considers them to be residing in the same household. In other words, even if your child spends a portion of the year living away from home for school, you will still be eligible. Additionally, there is a particular exception for those who provide for their dependent parents. Even if your parents don't live with you, they can still qualify as a qualifying person for the residence test as long as you can list them as a dependent and you pass the support test. More than half of the annual maintenance costs for their house must be covered by you. If you paid more than half the expense of keeping your parent in an assisted living facility or nursing home, you would also pass the qualifying dependent test.

Can a couple qualify together?

Due to the complexity of these regulations, it is conceivable for two taxpayers who were previously married to one another to each qualify as the head of household, provided they were divorced as of December 31 of the tax year or hadn't lived together since July 1. Mary might keep up her own home. She spends the majority of the year with the child she and John share. She declares herself dependent on the child. She has a roommate to help her make ends meet. However, the roommate only covers roughly 25% of the household's annual costs. Mary covers the remaining 75%. Mary is eligible to be the head of the home. She passes both the support exam and the qualifying dependent test. Due to their breakup, she and John are "considered unmarried" by the IRS. On June 1, they moved into separate homes. After that, they never shared a home again. John is the lone resident. He covers all of his household costs in full. Additionally, he covered more than half the annual expense of his mother's nursing home stay. John is also eligible to be the head of the home. He is regarded as single, and because he takes care of his mother, he satisfies both the qualifying dependent test and the support test.

Questions and Answers (FAQs)

What distinguishes a head of household from someone who is single?

Both single filers and the head of household are unmarried taxpayers. But there are some significant variations. Single filers receive fewer tax benefits than those who file as the head of household and are not required to show that they are supporting qualified dependents.

What happens if two people both declare themselves the head of the household?

A head of household claim cannot be made by two divorced parents with the same dependents. Both returns won't be accepted by the IRS. If more than one taxpayer requests this status for the same qualified dependents, both taxpayers may be subject to a penalty.