It’s that time of the year again, and you’re wondering what to do with your taxes. You may be filing as a head of household, which means you paid more than half the costs associated with maintaining a home.
If this is true for you, then make sure to read this guide on filing taxes. This article will discuss what the status means, its qualifications, and other relevant information about it. As a pay stub creation company, we’ve spent thousands of hours perfecting our knowledge of the tax code – and we’re going to pass that knowledge on to you now!
Who is Eligible to Be the Head of Household?
To qualify as a head of household, the IRS has three requirements that you must follow (HOH). To begin with, you must be single or be regarded as single as of the last day of the tax year. If you satisfy the following requirements, the IRS will consider you to be single:
- You have a divorce or a separation agreement.
- During the final six months of the year, your spouse didn’t reside with you.
- Separate tax returns are filed by you and your spouse.
The IRS will treat you as married for tax purposes if the circumstances surrounding your separation are transitory. Military deployment, residing in a medical treatment facility, or enrolling in college are examples of temporary separations that qualify.
Second, you must have covered more than half of the annual costs of maintaining a residence. Your rent or mortgage payment, property taxes, utilities, repairs, upkeep, and food purchases are all included. Clothing, life insurance, and transportation are not permitted. If you pay more than half of your family monthly expenses out of your own salary or savings, you can still claim head of household even if you get child support or alimony.
The last requirement is that you must spend more than half the year living at home with a qualifying dependent. Many people who register as heads of household have children as their qualifying dependent. Your biological kid, stepchild, foster child, sibling, step-sibling, half-sibling, or adopted child may be considered a qualified child.
Head of Household Qualifications
The following are the three essential requirements to qualify as a head of household:
1. You Are Unmarried, Recently Divorced, Or Legally Separated From A Spouse
You must have spent the last six months of the year living apart from your spouse. Separations resulting from one spouse being away at school, working elsewhere, or in military service do not qualify.
2. You Must Contribute More Than Half Of The Household Expenses
The IRS Publication 501 states that expenses constitute rent, interest payments on mortgages, property taxes and insurance payments, maintenance, and utilities. The following items are not included: clothing, education, medical treatment, vacations, life insurance, and transportation.
3. A “Qualified Dependent” Must Reside In Your Home For More Than Half A Year
Children, stepchildren, adopted or foster children, grandchildren, or siblings may be considered dependents. The youngster must also be younger than 19 years old (or under the age of 24 if a full-time student). If the relative is fully and permanently incapacitated, regardless of age, you can also include them as a qualified dependent. However, if the dependent is a sibling, they must be your age or younger and have an annual gross income of less than $4,300.
A parent, stepparent, niece, nephew, aunt, uncle, and daughter, son, mother, or father-in-law are examples of other non-child eligible dependents. If you pay for half of their housing expenses, especially if they reside in a nursing facility, you can claim your parents as a dependent even if they do not live with you. The same is true for a college-aged youngster. Again, they cannot have a gross income of more than $4,300.
Tax Returns
Once you have determined you meet the three criteria for filing as head of household, either an IRS Form 1040A or Form 1040 can be used to claim this status. To indicate your status, check the “Head of Household” box after entering your personal information.
Tax Benefits of Filing as Head of Household
Filing as a Head of Household has advantages such as a higher standard deduction and lower tax brackets.
For the 2020 tax year, the standard deduction for a head of household is $18,650, compared to just $12,400 for a single filer. It is less than the standard deduction for married couples and survivors. The tax rates are also more advantageous.
If you are thinking about filing as a Head of Household, be sure you understand the rules and that you meet them. The IRS will almost certainly scrutinize these to ensure that you genuinely qualify.
The Bottom Line
There are many ways you can complete your tax filing, from hiring a professional or doing it all online. We hope that our guide has helped clear up any questions you may have had about what is required for each type of taxpayer and which methods will work best for your situation.
If you’re under the head of household category and need to create an invoice, or you would like to learn more about how this status affects your taxes, you can head over to the IRS website, or call their helpline at 800-829-1040 for more information.
Frequently Asked Questions
What If I Filed Single Instead Of Head Of Household?
If you filed single instead of head-of-household, then any income you should have reported on your tax return will not be accounted for. If this happens to you, there are a few ways to fix it:
- File an amended return with the correct information and pay additional taxes if needed.
- Fill out Form 4868, which is an automatic extension to file for those who need more time.
- File as head-of-household with a joint tax return and include the other spouse’s income on your forms.
Am I Head Of Household If I Rent?
If you are not claiming a home as your own, but if you pay rent on the property and live in it for at least half of the year, then yes. You can claim head-of-household status even if someone else owns the house or apartment that you’re renting.
What Is The Minimum Income For Filing As The Head Of Household?
For those under 65, the minimum earnings must be $18,650. Meanwhile, ages 65 and above must earn at least $20,600.
Which Is Better, Filing As A Single Individual Or As A Head Of Household?
Most people who file as head of household can save money on taxes. However, some exceptions, such as if you have a substantial amount of itemized deductions, would reduce your tax bill more by filing separately than if you filed jointly with another person. It might be better to list yourself as single and not specify a spouse on your W-2 form if this is the case.
Can I Get In Trouble For Filing As Head Of Household?
If your filing status is head of household, you might wonder about the risks of making a mistake. Unfortunately, heads of households may face the consequences if they fail to file or provide incorrect information on their taxes.
However, it’s important to remember that these penalties can be avoided by following IRS guidelines carefully when filling out your taxes.
What Do I File If My Spouse Filed Head Of Household?
Separate returns would have to be filed by you and your spouse, and you might have to meet other head of household requirements. However, your spouse can claim a standard deduction on her tax return if you qualify as head of household.
Do Head Of Households Receive Stimulus Checks?
This is a question many people are asking themselves as they go to file their taxes this year. The answer is yes, but it will depend on how much money you made last year and what other income sources you had.
