What is Head of Household and when should you file that status with the IRS
Head of Household is a tax filing status that allows unmarried individuals to receive numerous benefits ranging from lower tax rates to the ability to receive a higher standard deduction. Before checking the box on your tax form stating that you are filing for Head of Household status, it is important that you understand what this filing means, who qualifies for it and when it should be filed.
What Does the Head of Household Tax Status Mean?
Typically, individuals who are unmarried must file under a single filing status with the IRS. Single filing status often has higher tax rates and the standard deduction is lower. While this status may seem satisfactory for some, it may not help those who are caring for a dependent and paying for the majority of the costs associated with maintaining a home or apartment.
People who are providing care and support to a closely-related dependent, paying for the maintenance and upkeep of an apartment or home, and who are unmarried qualify to file for Head of Household status. When this status is filed, individuals will be able to have higher standard deductions and may be eligible to make other claims or receive tax credits they would not qualify for under a single filing status.
What Qualifies an Individual to File for Head of Household Status with the IRS?
The IRS has very strict requirements people must meet in order to file for and qualify for Head of Household status. You must meet all of these qualifications in order to file and qualify for the Head of Household status on your tax filings.
The qualifications for Head of Household status include:
- Considered unmarried as of the last day of the tax year
- Contributing more than half of the cost of maintaining or keeping a home/apartment
- Caring for a dependent who has lived with you at least half of the year
In order to be considered unmarried, an individual must meet the state’s qualifications for being classified as ‘unmarried’. Each state varies in their classification, but unmarried can typically mean being single, legally separated, or divorced.
The second qualifying factor in filing for Head of Household status is the contribution of more than half of the expenses required to maintain or keep a home/apartment. The contributions must be made in the year of the tax filing in order to qualify.
Household expenses that can be considered when determining the total amount include:
- Property taxes
- Rent or mortgage
- Renter’s insurance or property insurance
- Utilities – gas, electric, water
- Recent repairs or routine maintenance
- Food purchases
The last qualifying factor is caring for and having a closely-related dependent living at your place of residence for at least of the year. The dependent must have physically lived at your place of residence for at least half the year and you must be able to claim them as an exemption.
Individuals who may qualify as closely-related dependents include:
- Child – son, daughter, grandchild, or stepchild
- Father or mother
- Brother, grandparent, niece, nephew, or sister
If these three qualifying factors have been met, you may want to consider filing for Head of Household status with the IRS. It will allow you to qualify for a lower tax bracket and make deductions that you might not otherwise be able to make when filing under a single filing status.
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