Head of household tax filing status is error prone, in part due to the complexity of the requirements to file as head of household. Also, head of household status provides a lower tax rate and a higher standard deduction than filing as single or married filing separately. Even some paid tax preparers will sometimes incorrectly recommend that a taxpayer file as head of household. About a fifth of income tax returns claiming head of household status do so incorrectly.
An incorrect tax filing status can affect a student’s eligibility for federal student aid.
When both of a dependent student’s parents file federal income tax returns as head of household, the U.S. Department of Education requires the college’s financial aid administrator to consider the tax filing status to be conflicting information. The financial aid administrator may not disburse federal student aid until the conflicting information is resolved. The conflicting information may be resolved by documenting that the head of household status is correct. It may also be resolved by the parents filing amended federal income tax returns (IRS Form 1040X) to correct the errors in their tax filing status.
Requirements to File as Head of Household
To file a federal income tax return with head of household status:
- The taxpayer must be unmarried or considered unmarried on the last day of the tax year
- The taxpayer must have paid more than half the cost of keeping up the taxpayer’s home for the tax year
- A qualifying person must live with the taxpayer in the taxpayer’s home for more than half the tax year, not counting temporary absences for school, illness, business, vacation or military service
The cost of keeping up the taxpayer’s home includes amounts paid for property taxes, mortgage interest (but not principal payments) or rent, utilities, repairs and maintenance, property insurance, food eaten in the home and other household expenses.
When is a Taxpayer Considered Unmarried
To be considered unmarried on the last day of the tax year:
- The taxpayer must file a separate return (e.g., single, married filing separately or head of household, but not married filing jointly)
- The taxpayer must have paid more than half the cost of keeping up the taxpayer’s home for the tax year
- The taxpayer’s spouse must not have lived in the taxpayer’s home during the last six months of the tax year (temporary absences do not count)
- The taxpayer’s home must be the main home for the taxpayer’s child, stepchild or foster child for more than half of the tax year
- The taxpayer must be able to claim an exemption for this child, with an exception for multiple support agreements
If the taxpayer has a nonresident alien spouse and does not elect to treat him or her as a resident alien, then the taxpayer is considered unmarried. However, the spouse cannot count as a qualifying person for head of household purposes. The taxpayer must have another qualifying person and satisfy the other requirements for head of household status.
Who is Considered a Qualifying Person
A qualifying person may include the taxpayer’s qualifying child or grandchild, if the child or grandchild is single. A qualifying child or grandchild who is married may also count as a qualifying person, if the taxpayer can claim him or her as a tax exemption.
A qualifying person may also include a dependent parent, if the taxpayer can claim an exemption for him or her. If the qualifying person is a dependent parent, the qualifying person does not need to live with the taxpayer, if the taxpayer paid more than half the cost of the home where the parent lived and the taxpayer can claim an exemption for the qualifying person.
When is a Child Considered a Qualifying Child
For a child to be considered a qualifying child, the taxpayer and child must satisfy five tests:
- Relationship Test. The child must be the biological or adoptive son or daughter of the taxpayer, or a stepchild or foster child, a brother, sister, half-brother, half-sister, stepbrother, stepsister or a descendant of any of these relatives (e.g., a grandchild).
- Age Test. The child must be under age 19 (or a full-time student for at least five not necessarily consecutive months during the year and under age 24) as of the end of the tax year and younger than the taxpayer (or younger than the taxpayer’s spouse, if filing a joint return). The age test does not apply if the child is permanently and totally disabled during the tax year.
- Residency Test. The child must have lived with the taxpayer for more than half of the tax year. There is an exception for children of divorced or separated parents or parents who lived apart during the last six months of the tax year, where the non-custodial parent is able to claim an exemption due to a multiple support agreement.
- Support Test. The child cannot provide more than half of his or her own support during the tax year. Scholarships and grants do not count when determining whether the child provided more than half of his or her own support.
- Joint Return Test. The child cannot file a joint federal income tax return with his or her spouse for the tax year, except if they file a joint return solely to claim a refund of income tax withheld or estimated tax paid.
A child can be considered a qualifying child of only one person. Thus, both of a child’s parents cannot both file federal income tax returns as head of household using the same qualifying child. They must each have a different qualifying child.
Internal Revenue Service (IRS) tiebreaker rules will treat a child as a qualifying child of the parent with whom the child lived the most during the tax year. If the child lived equally with both parents, then the IRS will treat the child as a qualifying child of the parent with the higher adjusted gross income (AGI) during the tax year.
Examples of Common Head of Household Errors
The following are some of the more common errors involving head of household status:
- Both parents file as head of household, using the same child as a qualifying child
- Both parents file as head of household, claiming that they each provided more than half the cost of upkeep for the same home
- The taxpayer claims head of household status, but did not pay for more than half the cost of keeping up the home (e.g., the parent is living with a grandparent or the other parent paid for the cost of the home)
- The taxpayer is divorced and lives with his or her ex-spouse in the same home and both file as head of household
- The taxpayer is married and the taxpayer’s spouse lived in the taxpayer’s house for one or more days during the last six months of the tax year
- The taxpayer is married and lives with his or her spouse, who does not work (e.g., income below the IRS filing threshold)
- A qualifying child did not live with the taxpayer for more than half of the tax year
- The qualifying child was age 19 or older (or, if a student, age 24 or older) as of the last day of the tax year
- The qualifying child was age 19-23 and a student, but was enrolled on less than a full-time basis
- The qualifying child was age 19-23 and a full-time student, but only for four or fewer months during the tax year (e.g., the child enrolled in college starting in September after a gap year)
- The child provided more than half of his or her own support during the tax year
- The child filed a joint federal income tax return with his or her spouse
References
Publications
- Your Federal Income Tax, IRS Publication 17, pages 23-25
- Exemptions, Standard Deduction and Filing Information, IRS Publication 501, pages 8-10
Current Law
- Internal Revenue Code: 26 USC 2(b) and 26 USC 7703(b)
- Regulations: 26 CFR 1.7703-1(b)
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