Failure to use head of household (HOH) filing status is a common tax filing mistake. HOH status is preferable to single or married filing separately status because the tax rate brackets are more favorable (except 35% single bracket) and the standard deduction is larger.
If you are not eligible to file jointly or as a qualified surviving spouse, HOH filing status may be the best alternative to minimize your federal income tax liability. To qualify as a HOH, each tax year you must –
1. Be unmarried, or considered unmarried for this purpose if married on the last day of the tax year;
2. Note be a surviving spouse;
3. Not be a nonresident alien at any time during the tax year;
4. Maintain a household as his home (i.e., provide over half of the costs) that is the principle place of abode for more than half of the tax year of (a) a qualifying child, but not if the child is married and files a joint return or (b) a dependent relative for whom an exemption can be claimed; or
5. Maintain a household that constitutes the principle home of your mother or father if you can claim an exemption for such parent (can be separate from your home).
The expenses of maintaining the home include property taxes, insurance, mortgage interest payments, rent, utilities, maintenance and providing food on the premises. Household expenses (i.e. expenses for the mutual benefit of the occupants of the household) do not include expenses for clothing, education, medical care, vacations, life insurance or transportation.
Example: Qualifying child is married.
Carl is unmarried and his 22-year old daughter and her husband are living with him. She and her husband are full-time students and do not provide more than half of their support. Carl is providing more than half of the cost of maintaining his household. If Carl’s daughter and her husband do not file a joint return, Carl may claim head of household status with his daughter as the qualifying child.
Please contact us if you would like to discuss HOH filing status.