One of the most basic yet crucial decisions you must make when filing your taxes is which filing status you should choose. This one selection can significantly affect your total tax due. As a single person, you might find yourself torn between choosing to file as single or head of household.
In some cases, single people can file as head of household to receive the benefits that go with this filing status. Reviewing head of household requirements will help you decide if and how to do this.
Who Is Head of Household?
The head of a household is the person who pays more than half of the expenses associated with keeping up the home. The head of household must also have a dependent, also called a "qualifying person" living in the home, such as a child or dependent parent.
If you meet both of these requirements and do not have a spouse, you may qualify to select this status. The IRS website can help you determine your filing status.
Head of Household Versus Single
Both the head of household and single status apply to individuals who plan to file without listing a spouse on the form. To file as a single person, you must be unmarried, legally separated or divorced from your spouse as of the last day of the year.
To file as head of household, you can also be "considered unmarried." That means that while you may still be married, the spouse was not present during the last six months of the year. You also have to meet a few other requirements in that case.
If you're single, according to IRS requirements, the one major rule is that you must have a qualifying dependent in order to claim head of household status. Divorced parents cannot each claim the same dependent, since one must pay more than half of the dependent's expenses.
Benefits of Head of Household
When you file as head of household instead of single you can take advantage of higher tax deduction amounts. The standard deduction you can claim is higher compared to the single status. You might also qualify for the child and dependent care credit and child tax credit, explains the IRS.
Head of household filers also enjoy a lower tax rate compared to other statuses. In most cases, if you qualify to claim head of household status, you should do so instead of checking the "single" box.
Dependent or Qualifying Person
In order to file as head of household, you have to list a dependent on your return, but you may wonder who is considered a qualifying person for this status. The dependent can be a child or grandchild, parent, or other relative (like a sibling) who meets all IRS dependent tests.
The person must live with you for over half the year and you must be able to claim a tax credit for the individual. If you're unsure, consult with a tax professional for guidance on who is a qualifying person for the purpose of claiming head of household status.
Read More: Claiming Dependents for Your Taxes
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