Tax Tip of the Week | No. 240 | Do You Qualify For Head of Household?
Tax Tip of the Week | March 12, 2014 | No. 240 | Do You Qualify For Head of Household?Many people overlook this filing status...
Many taxpayers overlook this possible filing status when deciding how to file their tax returns. This is especially true among recently divorced couples when there is still a dependent child in the home. While filing as Head of Household will lower your taxes vs. filing as “Single”, you must follow the IRS guidelines to avoid inquiry or audits.In order to file as Head of Household, you must meet several requirements. First, you must be unmarried, pay more than half the costs of supporting your household and live with other qualifying family members for whom you provide support for more than half of the year. Some examples of qualifying family members include a dependent child, grandchild, brother, sister or grandparent. You must also prove that you provide more than 50% of the support for the qualifying family member. If you do not meet all of these requirements, you are not eligible to file as Head of Household.Married taxpayers are not eligible to claim Head of Household status, as either you must be single or in some stage of separation. According to the IRS, you are considered unmarried if you are single, legally separated by divorce or have lived apart from your spouse for six months or more in the calendar year.If you qualify for Head of Household filing status, there are significant tax savings over filing as Single. First, the tax rate for Head of Household is much more favorable. Second, your standard deduction is almost $3,000 higher ($8,500 vs. $6,100 for 2013).It can become very confusing to ensure your definition for Head of Household is the same as the IRS guidelines. Be sure to call us if you have never filed as Head of Household before but think that you may qualify.
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