The amount and the sources of your income can affect a lot of tax issues but they generally don’t affect your filing status. That advantageous “head of household” tag is one of five available filing statuses. It comes with numerous qualifying rules but whether you’re paid on a W-2, a 1099 or have no earned or unearned income at all isn’t one of them as long as you're not married.
You can file taxes as head of household under some circumstances even if you have no income.
What Is a W-2?
The W-2 is that tax form your employer gives you at year’s end, detailing what he's paid you and what taxes he withheld from your paychecks and sent to the Internal Revenue Service on your behalf.
Of course, there are a whole lot of other boxes on a W-2 as well. They show exactly what kinds of taxes you paid including income tax as well as Social Security and Medicare. If you earn tips and reported them to your employer, this information will turn up on your W-2, too.
But all this information just means that you worked for someone else for your pay. You were an employee, not an independent contractor or self-employed. And filing as head of household does not depend on you being an employee.
What's the Difference Between Single and Head of Household?
The distinction between head of household vs. single filing status is really pretty significant. First, your standard deduction is $6,000 more if you file as head of household – the difference between the $12,000 single standard deduction and the $18,000 allowed for head of household filers in 2018.
Tax brackets are more generous as well. The 22-percent tax bracket begins at $38,700 for single filers but you’re not in the 22-percent bracket until your income hits $51,800 if you can file as head of household. If you don’t earn much money at all, you’ll hit the 12-percent bracket – rather than the zero bracket – at $9,525 if you’re single but not until $13,600 if you’re head of household. Overall, filing as head of household means that you’re taxed at a lower rate.
So What Is Head of Household?
The tax code doesn’t bestow gifts like this lightly so it should come as no surprise that qualifying as head of household can be tricky. Perhaps the most important rule concerns your marital status – everything else revolves around this.
If you’re not legally married – you’ve never tied the knot or you have a divorce decree that ends your marriage on or before Dec. 31 of the tax year – you qualify. That’s pretty simple. But some taxpayers can also qualify if they’re “considered unmarried” according to IRS standards and this is where it can get confusing.
The IRS says you’re considered unmarried if you’re legally separated by court order, but not necessarily if you and your spouse simply move into separate households. You might be head of household if you separated no later than June 30 of the tax year and you didn’t live together again at any point during the next six months, but some other rules apply in this case.
Temporary absences such as those associated with attending school, working in another state, being incarcerated, or being deployed don’t count. You're still considered married in these cases. The IRS assumes that your spouse is expected to come back eventually.
Common law marriages are “real” marriages under the tax code even if you never took out a marriage license. If you live in one of the states that recognize these marriages, you won’t qualify as head of household simply because you never actually stood in front of a justice of the peace or a clergy member and said, “I do.”
Can You File as Head of Household If You Live Alone?
This is another tricky question. You can’t file head of household unless you have a dependent. Does that dependent have to live with you? Yes ... and no.
A “qualifying person” must live with you subject to the same rule that applies to marriages: Temporary absences such as attendance at school don’t count. Children, stepchildren and foster children are all qualifying persons if they lived with you for more than half the year. If your kids live with you 183 days or more during the tax year, you’re good. It doesn’t matter if they spend the rest of the year with their other parent and you live alone during that time.
Your Qualifying Person Must Be Your Dependent
You must also be able to claim an exemption for your child, meaning that you can claim her as your dependent. Yes, the new tax law has eliminated personal exemptions in 2018 and going forward, but this only means that you can’t take a tax deduction for dependents any longer. The same rules apply as to whether they qualify as your dependents or not when it comes to claiming certain tax perks.
The key phrase here is that you must “be able to claim” the exemption. You don’t necessarily have to do so. You might have succumbed to a fit of goodwill and given the exemptions to your ex in 2017 – which is allowed – but you could and would have claimed your kids otherwise so this counts toward qualifying as head of household.
Your child must be under the age of 19 or age 24 if she’s a full-time student to qualify as your dependent. Other qualifying relatives include siblings, half-siblings, grandchildren, grandparents, nieces and nephews if they live in your home more than half the year.
An Exception for Your Parents
Now here’s another wrinkle: If your qualifying person happens to be your parent, he might earn your head of household filing status even if he doesn’t live with you. But still more rules apply to this situation: First, you must be able to claim a personal exemption for him just as with your kids. He must qualify as your dependent. Second, you must have paid more than half the costs associated with maintaining his home, whether it’s his own abode or an assisted living facility.
If you qualify under these rules, yes, you could live by yourself and still file as head of household as long as you pay more than half of Dad’s household bills.
A Special Rule for Deceased Dependents
Your qualifying person doesn’t necessarily have to be alive at the end of the tax year. Your dependent can still qualify you as head of household if she lived with you at least half the portion of the year when she was living. For example, if she died at the end of April but she spent at least two of those months plus one day living under your roof, this is considered to be the equivalent of having lived with you for half the year or more.
The same rule applies to your parent. You must have paid more than half his living expenses for more than half the portion of the year that he was alive.
And Still More Rules…
You must qualify as head of household in a few other respects as well if you’re going to claim this beneficial filing status.
The IRS has rules for who is “considered married” for purposes of filing a joint married return as well. Basically, if you’re eligible to file a joint tax return with your spouse because you’re considered married, you probably don’t qualify as head of household.
The IRS says you’re considered married if you're still legally married and residing together or if you’re common-law married in a state that recognizes these unions. You’re considered married even if you’re legally married but are simply living apart or you’re separated by a “interlocutory” court order – a divorce or separation decree that’s not final yet.
If you’re considered married under these rules, you qualify to file a joint return with your spouse. And you can't file a joint return if you’re going to qualify as head of household.
You can’t claim your parent as a qualifying relative for head of household purposes if you’re “considered unmarried” but not yet really unmarried because you haven’t received a divorce decree yet. If you’re just considered unmarried but you’re not yet legally single, your qualifying person must be your son, daughter or eligible foster child and you must meet one more test.
Paying for More Than Half Your Household Costs
You must also have paid for more than half the cost of keeping up your home over the course of the year to be considered unmarried for head of household purposes.
So what are qualifying costs? This issue is so complicated that the IRS offers a special worksheet to help you figure it out. Basically, they include rent or mortgage interest – but not mortgage principal. They can include property taxes, homeowners insurance, utilities and your grocery bills. You can even count the cost of repairs made to your home.
But you can’t include the tab for dining out in a restaurant rather than eating at home. This is considered entertainment. Vacations don’t count, either, nor do medical expenses or health insurance premiums, education expenses, clothing, transportation or life insurance.
Moreover, you must pay these expenses from your own funds and this might be a challenge if you're not employed and you don’t have a W-2. Income such as government assistance or child support doesn’t count as your own funds. But self-employment income does count, and if you’re actually divorced or never married in the first place, this rule doesn’t apply.
Seek Professional Help
This is admittedly a lot to take in and a lot of the rules may seem conflicting. The bottom line is that there’s a big difference between actually being legally unmarried and being considered unmarried, at least for head of household purposes. Different rules apply in each situation.
Consider consulting with a tax professional if you’re confused or even a little bit unsure if you qualify as head of household. You could be inviting at least a little scrutiny from the IRS if you incorrectly claim head of household filing status when you don’t qualify – especially if you also claim the Earned Income Tax Credit. You’ll probably receive Notice CP85A from the IRS after you’ve filed your tax return, asking you to confirm all the details on which you based your filing status. And who needs that aggravation?