- Can I Claim Head of Household if I'm Still Legally Married but Not Living Together With My Spouse?
- Can a Married Woman Be Head of Household With the IRS?
- Can I Amend My Tax Return From Single Status to Married Filing Separate Status?
- IRS Penalties if a Tax Return Is Incorrect
- What Expenses Does Head of Household Pay for Dependents?
- How Far Back Can You Amend Tax Returns?
Claiming head of household filing status when you don't qualify probably won't put you in jail, but it might result in an audit. The Internal Revenue Service is well aware that the rules for filing for head of household are complicated, so you might just end up with a bill for additional tax, interest and financial penalties – provided you made an honest mistake and didn't intentionally do anything wrong.
Advantages of HOH Status
The greatest problem with incorrectly claiming head of household status is that it affects so many other aspects of your return – most of which may result in receiving a tax refund. It's not a simple error. For example, HOH status affects your tax bracket, and it awards you a larger standard deduction. It may earn you tax credits that you wouldn't qualify for otherwise. Overall, it can make a drastic difference in what you owe the IRS – or what the IRS owes you. If the IRS sent you money – and particularly a lot of it – it's a safe bet that the IRS will do whatever necessary to get that money back, plus interest and penalties.
Head of Household Qualifications
It's surprisingly easy for taxpayers to unwittingly claim HOH status when they don't actually qualify. Complex rules apply to your marital status, your dependents, and who paid the costs of your home during the year. For example, you can't be head of household if you're married – but you don't actually have to be divorced yet. It's sufficient if you and your spouse don't live together from July 1 onward. You have to have a dependent, and if your dependent is your child, she must live in your home at least half the year. This can be complicated if you're divorced and she divides her time between your home and that of your ex. You must have paid more than half your household's costs for the year, and this can get dicey if someone else lives with you and contributes. The IRS uses a variety of methods to screen returns for possible audits, so if both you and your ex claimed the same dependent, or if some other inconsistency raises a red flag, the IRS is certain to notice it.
If the IRS suspects you don't qualify as head of household, you'll probably receive a request in the mail for some corroborating information or documentation to prove it. This might be the first time you realize your error. If it's an honest mistake, you can admit it, and the IRS will probably just adjust your tax bill accordingly. If you end up owing more in taxes – which will probably be the case – you could be subject to a late payment penalty of .5 percent for each month it takes to for you to pay the extra amount you owe. If you qualified for a refundable credit due to your HOH status, you'll have to give it back, plus an additional 20 percent of the credit amount. If the IRS determines that you claimed this filing status knowing that you didn't qualify, and particularly if you accepted a refunded credit because of it, you could be subject to a civil fraud penalty of 75 percent of the amount you underpaid due to the misrepresentation.
What to Do
If you realize your error before you receive communication from the IRS, you can file an amended tax return. You should do this sooner rather than later to make it clear that it was an honest mistake on your part. You'll probably owe more in taxes, plus interest on the difference in your tax bill, but you might escape extra penalties if you correct the matter yourself.