It only seems fair that you should get a clap on the back and some recognition if you’re solely responsible for making sure all those mouths in your household are fed every month. As it turns out, the federal government agrees with you. The Internal Revenue Service says you’re “head of household” for federal tax purposes if you meet some qualifying rules, and this makes you eligible for some preferential tax treatment. The rules can be a bit complicated, however.
You Must Be Unmarried or “Considered" Unmarried
The first rule for qualifying as head of household is that you must be unmarried or be “considered" unmarried, according to IRS terminology. This is a bit complicated because the word “considered” opens up some gray areas.
We’re not talking about the whole year here. The only date that matters is Dec. 31, the last day of the tax year. You’re obviously unmarried if, on that date, you never married or you have a final decree of divorce. That’s easy enough. But you’re also "considered" unmarried if you have a permanent court order stating that you’re separated from your spouse. Yes, you’re still technically, legally wed – at least, neither you nor your spouse is free to marry anyone else – but the IRS doesn’t care about that little technicality.
You can live in wedded bliss right up until Dec. 30, but the IRS says you’re unmarried for the whole year if you receive a divorce decree or a separation order the next day.
The "Considered" Unmarried Loophole
You’re still considered unmarried even without a separation order or a divorce decree if you and your spouse move into separate households prior to July 1 of the tax year and if you never once live together again after that date.
Temporary absences don’t count. In other words, you can’t have lived apart the last six months of the year because your spouse is away at school or working in another state. In this case, it can be reasonably expected that they'll return to your abode eventually. They didn’t leave with the intention of ending the marriage.
There's also one more gray area: You’re also considered unmarried if your spouse is a nonresident alien and you don’t make the election to treat them as a resident alien for tax purposes.
You’ll Need at Least One Qualifying Dependent
You must also legitimately feed at least one mouth in addition to your own if you want the IRS to agree that you’re head of household. You need a dependent.
In most cases, your dependent must live with you for more than half the year. That’s 183 days or more, in case you’re counting – and the IRS will count. The IRS uses its own special language here, too. Your home must be your dependent’s “principal place of abode.” In other words, they haven't been using your spare bedroom for months on end because they're taking an extended vacation. They can't have another address elsewhere.
“Temporary” absences, such as living away at school, are permissible in this case. The rationale is that they don't intend to live at school forever. They're just there for an education. Your home is still their principal place of abode.
Read More: Claiming Dependents for Your Taxes
Qualifying Dependent Loopholes
In most cases, your dependent would be your qualifying child – your biological or adopted son or daughter, or a foster child placed with you by a state authority. You must claim them as a dependent, but the IRS allows for a loophole here, too.
Maybe you’re divorced and you’re entitled to claim your child as a dependent, but being the generous soul that you are, you gave the right to claim them to your ex this year. You can legally relinquish your right to claim your child to the noncustodial parent, and the IRS says that’s OK. You can still qualify as head of household if you and your dependent meet all the other rules.
Your dependent doesn’t have to be your child, either. They can be what the IRS calls a "qualifying person" or a "qualifying relative": a grandchild, sibling, half-sibling, parent, step-parent, step-brother, step-sister, aunt, uncle, grandparent or in-law – as long as you can claim them as a dependent and they lived with you for at least half the year.
Again, temporary absences don’t count if they're expected to come back to your house eventually.
And Some Exceptions…
There are three exceptions to these rules. One’s good, and two are maybe not so good:
- Your dependent doesn’t have to live with you if they're your parent. The IRS has a special rule for parents. They can maintain their own residence and you can still claim them as a dependent provided that you pay for more than half their household bills over the course of the year. This can mean paying for more than half the cost of their rest home or nursing home if they no longer maintain her own residence.
- Your qualifying dependent must be your child, stepchild or foster child if you’re “considered” unmarried through one of those gray areas mentioned above rather than being absolutely single because you never tied the knot in the first place, or because you have a decree or court order. In other words, you need a qualifying child in this case, not a qualifying relative.
- The same applies if you’re claiming head of household status because your spouse is a nonresident alien. She doesn’t qualify as your dependent.
Supporting Your Household
You must personally pay for more than half the costs of keeping up your home to qualify as head of household. And keep in mind that these rules aren’t either/or qualifiers. You must be considered unmarried, have a dependent who lives with you for more than half the year and pay most of the household bills.
Unfortunately, not all household expenses count toward this requirement. Those that do qualify include:
Expenses like clothing, entertainment – including meals out because these aren’t considered groceries – education, transportation and life insurance don’t count. And, perhaps unfairly, neither do health insurance premiums and medical costs. The IRS takes the position that these are personal, not household, expenses.
Government Funds Don't Count
That money you’re pouring into your household must come from your savings or earnings. You can’t count expenses you might pay for through government assistance or even gifts from family or friends. You can receive money from these sources, but make sure you use it to pay for non-qualifying expenses if you do. They won’t count toward that 51-percent rule if you use them toward the upkeep of your household.
The Head of Household Advantages
Is it even worth sorting through these myriad details to determine whether you qualify as head of household? In a word, yes. You’ll be entitled to a higher standard deduction than single filers, and your filing status affects your tax brackets as well. This means that you can earn more money before moving to the next highest tax percentage rate.
The standard deduction for a head of household filer is $18,650 in 2020. It drops to $12,400 if you must file a single or a separate married tax return instead. So your household bills, marital status and your dependent just shaved an additional $6,250 off your taxable income.
Let’s assume that your taxable income is $50,000 after you take that $18,650 standard deduction for the 2020 tax year, the return you’ll file in 2021. This puts you in a top tax bracket of 22 percent if your tax filing status is single, but you’ll pay only a 12-percent top tax rate on an income of $50,000 if you qualify as head of household. That’s pretty significant, although these tax brackets balance out with incomes of $163,300 or more. Income thresholds for tax brackets shift moderately from year to year.
A Word of Warning
Of course, there’s a catch. These are taxes, after all.
You might open yourself up to an IRS audit if you claim head of household filing status and you don’t meet all these rules to a T – or if you can’t prove that you do. The IRS doesn't give away the right to tax that extra $6,250 lightly. So keep good records and consult with a tax professional to make sure you absolutely qualify as head of household before you claim this filing status.
And if you do qualify? Congratulations. You just saved yourself a bunch of income tax dollars.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.