The Internal Revenue Service has five different filing statuses you can choose from, and each one comes with its own set of rules about who can claim which status. Head of household is generally a desirable choice, since the rate is usually lower than it is for other filers. Make sure that you qualify before using this option since you’ll end up owing the IRS taxes and penalties if you underpay because you made the wrong choice.
First and foremost, you must be single or unmarried if you want to file as head of household, and your status as single or unmarried must be effective by the last day of the calendar year. This rule can get a little confusing, since the IRS says you can be married and still qualify as unmarried if you and your spouse live apart for the second six months of the year. Temporary separations don’t count. If you are unmarried, you still have to pass the other IRS tests to be able to file as the head of household.
Paying the Bills
According to the IRS, you only get to be head of household if you cover at least half the cost of maintaining your home for the year. Check yourself by using the “Cost of Keeping up a Home” worksheet from the IRS. This lists all the essential costs of putting a roof over your head, such as rent or mortgage expense, property taxes, food, insurance and utilities. List the total cost for each item and how much you paid. If your share comes out to more than half, you’ve passed the IRS head of household test for paying the bills.
To file as the head of household, you must provide more than half the support for a dependent relative. Typically the dependent is your child, but it could also be anybody else that you are allowed to claim as an exemption. This might include your mom, uncle, brother or even a grandparent, as long as you financially support the person. In many cases the dependent will live with you, but not necessarily. If you pay the costs for your grandfather while he’s in a nursing home, for example, he can qualify as a dependent even though he’s never set foot in your house.
The IRS has plenty of exceptions to their own rules, especially when it comes to defining dependents. If you have a new baby she’ll qualify as a dependent for the year no matter what month she was born. The same holds true if someone you’ve been supporting dies; even if a dependent dies in January you can usually claim that person as a dependent for the entire year. When you care for a disabled relative who earns money working in a sheltered workshop setting, that relative may qualify as a dependent despite making money that he contributes to his own support.
For more detailed information, check out these IRS publications:
IRS: Filing Status
IRS: Personal Exemptions and Dependents
IRS: Exemption, Standard Deduction, and Filing Information