You have to be unmarried, or you must be “considered unmarried.” You must have a qualifying dependent, and you must pay more than half the cost of maintaining your home for the year.
Why File As Head of Household?
The head of household (HOH) filing status is advantageous in a couple of ways. The standard deduction available to these taxpayers is much more than that which is offered to single persons: $18,800 in the 2021 tax year, the tax return you’ll file in 2022. Compare this to just $12,550 for single filers. Standard deductions are indexed for inflation, so they go up in 2022 to $12,950 for a single filer versus $19,400 for a head of household.
Qualifying Rules: You Must Be Unmarried
The first qualifying test for HOH status is that you must be unmarried or “considered unmarried” as of the last day of the tax year. You would qualify if you were never married, or if you’re legally divorced and haven’t remarried. You can also qualify if you didn’t live with your spouse at any time during the last six months of the tax year. This is the test for being considered unmarried. Temporary absences such as attending school out of state or incarceration don’t count. Your intention when you move into separate households must be that you and your spouse are not going to begin living together again.
You Must Have a Dependent
You must also be able to claim a closely-related person as a dependent. Your dependent can be either a qualifying child or a qualifying relative. They must live in your home for more than half the year, although the IRS makes an exception to this rule for parents and other close relatives if you pay more than half the cost of keeping up their home during the year. The IRS also offers a special provision for divorced or separated parents. You would still qualify as head of household if you’re the custodial parent and your child lives with you more than half the year. But you’ve relinquished the right to claim the child as a dependent for other tax purposes, allowing their other parent to do so.
You Must Pay More Than Half Your Home’s Costs
You must also pay for more than half the costs of maintaining your residence during the tax year. Allowable costs include mortgage interest or rent payments, utilities, property taxes, property insurance, groceries, and other household items. They don’t include health insurance, clothing, or entertainment.
When Two Taxpayers Share the Same Address
The question becomes whether the address itself constitutes one household, or if each family living there is a separate household unit if two or more taxpayers share the same address. The term “household” is what generates the tax issue. It can mean one single residential structure, or it might have less of a physical meaning. It might instead refer to separate economic units living inside the same residence. The IRS has stated that the HOH status isn’t a matter of a physical address. Rather, it’s defined by the totality of all the facts of the case.
A Case of Two Households
Let’s say that Sam and Sally are roommates. They lease a house together. They each have a dependent child who lives with them. Neither of them is married. They split the rent, the utilities, and the grocery bill. Neither would qualify as head of household. Each is paying 50% of their joint household bills, not more than half. But they might qualify under IRS rules if they and their children maintain totally separate lives within the home. They don’t share meals. They have separate cable TV or streaming services. Sam hires a babysitter for his child if he’s going out for the evening, even if Sally is home. They’re simply two families sharing the same physical structure. They’re two separate economic entities, so each could qualify as head of household.
Proving That Two Households Exist
According to the IRS, taxpayers who share the same physical address must prove that they live as separate households and that they have independent lives outside the residence. Some factors that can weigh in favor of two separate households sharing the same physical residence might include:
Each family has separate telephone lines. The taxpayers maintain separate finances and separate bank accounts. Neither family contributes financial support to the other. The adult taxpayers have separate bedrooms. Their children have separate bedrooms. The family members don’t celebrate holidays or birthdays together.
