The Head of Household filing status allowed by the IRS is the most advantageous filing status for a single taxpayer. Numerous rules apply to qualify, but if you do, it will mean a higher standard deduction and wider tax brackets compared to single filing status. Here’s what you need to know:
- You must be unmarried or considered unmarried at the end of the year. This includes being single, divorced or legally separated under a separate maintenance decree issued by a court. You can be considered unmarried if you’re still legally married but you lived in a separate residence from your spouse for at least the last six months of the year.
- You must have paid more than half the cost of maintaining your home for the year. The support test requires that you provide more than half the cost of keeping up your home for the year. Qualifying costs include expenses like rent or mortgage interest payments, property taxes, property insurance, repairs, utilities and groceries. You must personally pay at least 51 percent of the household expenses: If you’re living with someone and split expenses exactly 50-50, you won’t qualify.
- You must have one or more qualifying dependents. A qualifying person must live in your home for more than half the year, and only certain closely related relatives qualify. The IRS outlines the wide-ranging but rigid rules in a table in Publication 501. Check the rules carefully, and note certain important exceptions. For example, you and your qualifying dependent are considered to reside in the same household during periods of temporary absence due to illness, education, business, vacation or military service. If your child lives away at school for a portion of the year, he or she still qualifies.
Your filing status determines the amount of your standard deduction, as well as the tax rates you’ll pay on your income. The head of household standard deduction for 2020 is $18,650. Contrast this with single filers and married individuals who file separate returns: $12,400 for each. (These amounts are typically adjusted annually.)
Note that this is just an introduction and there are a lot more rules — and exceptions. As the year progresses and you think you might be eligible for head of household filing status, consult with a qualified professional and be sure to adjust your paycheck withholding amounts accordingly.
