Are You the Head of Your Household?

You may consider yourself the king of your castle, the master of your domain, or for the less imaginative of you, the sole person in charge around the house. However, are you the head of your household? You may be the one responsible for the home and those who live in it, but for tax purposes, let's find out if you are indeed a head of your household.

Head of Household is a filing status that one may choose to file under. Each filing status grants you a Standard Deduction, which represents a dollar amount that you can deduct from the total sum of income you will be taxed on. For the 2009 tax return, as an example, those who qualified as Head of Household took $8,350 off of their gross income.

Although Head of Household is the most beneficial filing status for those who are not married, it is also the most difficult to qualify for. There are two main requirements:

In order to be considered Head of Household, you must be unmarried or considered unmarried from the viewpoint of the IRS. Some of you may consider yourself unmarried at times because your spouse routinely leaves his dirty socks and underwear by the bed; perhaps you wish you were unmarried for this reason or others. Sorry, that doesn't count. More on being unmarried in a moment.

Additionally, you must have paid out more than half of the total annual cost of keeping up a primary home that both you and a Qualifying Person have lived in.

In order to choose the Head of Household filing status, you must file using the Form 1040 or 1040-A. The 1040-EZ form is only for those filing as Single or Married Filing Jointly.

Considered Unmarried

If you are unmarried, that means that you are single or legally divorced by the last day of the taxable year. However, from a tax standpoint, you may be considered unmarried if you meet all of the following criteria:

• You must file a separate return. Obviously, if you file jointly with your spouse, you are married and cannot also file as Head of Household.
• Half the cost of keeping up the home still must have been expended by yourself, not your spouse or anyone else.
• Your spouse must not have lived in your home for the last six months of the year. This would hold true even if he or she were absent temporarily for reasons such as an illness or hospital stay, education purposes, business reasons, vacations or military obligations. Under all such circumstances, it is reasonable to assume that their main home is still their address of record, and that they would be returning to that home.
• For the majority of the year, your home must have been the main home for your child, stepchild, or foster child, for whom you can also claim as a dependent.

Special rules may apply to the above criteria if you if you live in a Community Property state, if your spouse is a Non-Resident Alien, or if you have a valid separation or spousal maintenance agreement that grants an exemption to the non-custodial parent (the parent that the child does not live with). See Publication 555 for more information on these special exceptions.

Keeping up a Home

The IRS provides a worksheet to help you determine if you monetarily have paid more than half of the total cost to maintain your home. Included in the costs you can account for are a mortgage or rental payment, along with any applicable taxes and or homeowners / renters insurance, utility payments, repairs and maintenance on the home, and general household expenses like food and housekeeping supplies.

Items that cannot be considered toward the upkeep of the home include apparel, education expenses, all medical expenses, life insurance and all transportation expenses (car ownership as well as the cost to operate the vehicle).

Publication 501 contains the worksheet you may use to figure the above expenses.

Qualifying Person

As mentioned above, for the purpose of claiming Head of Household, you must have a Qualifying Person who lived with you for the majority of the year. This person may be your:

• Child: Your son, daughter, or grandchild. If your child is married but you can still claim them as an exemption, they still qualify.
• Mother or Father: You must be able to claim an exemption for them.
• Relative other than your father or mother (such as a grandparent, brother, or sister): They must have lived with you for more than half the year and be related to you by blood or by a 'step' or 'in-law' relationship.

Publication 501 offers the following two examples. These situations, or ones closely related, account for many errors and subsequent audits of tax returns:

Example 1-Girlfriend. Your girlfriend lived with you all year. Even though she may be your qualifying relative if the gross income and support tests are met (she has minimal income and you support her), she is not your qualifying person for head of household purposes because she is not related to you.

Example 2-Girlfriend's child. The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative. As a result, he is not your qualifying person for head of household purposes.

Special Rule for Parents

There is also an exception that the IRS allows for a parent or parents who do not live with you. As long as you can claim an exemption for them, you may also consider them a qualifying person for Head of Household. You must be paying out more than half the cost of keeping up your parent's home, and or a special care home for the elderly that they live in.

Reference: Publication 501 Exemptions, Standard Deduction and Filing Information