When filing your income tax return, your tax filing status can have a significant effect on the amount of tax you owe. Most taxpayers fall under one of four tax filing statuses: single, head of household, married filing jointly or married filing separately. The head of household status is available to certain single and separated taxpayers and can potentially result in thousands of dollars of tax savings. If you meet the head of household rules, it is certainly an option worth considering.
Since the head of household filing status has a larger standard deduction than single and married filing separately, it may save a taxpayer a considerable amount of money.
Since the standard deduction for head of household is significantly higher than the deduction for single, there are strict eligibility requirements. To qualify as head of household, you must pay at least half the cost of keeping up your home for the tax year and your home must be the main home of a child that you can claim as a dependent for at least half the year. You must also be unmarried or "considered unmarried" to qualify. You are considered unmarried if your spouse did not live with you during the last six months of the tax year, you do not file a joint return and you meet the other requirements to be considered a head of household.
Head of Household vs Single Deductions
The Internal Revenue Service grants a standard deduction that you can claim instead of claiming your itemized deductions. Itemized deductions include a variety of common expenses, such as property taxes, mortgage interest, certain work-related costs and donations to charity. The standard deduction is $9,350 for the 2017 tax year if you file as the head of a household. Filers using the single or married filing separately statuses have a standard deduction of $6,350. If you use your standard deduction, the head of household status lets you avoid taxes on an extra $3,000 of your income.
For the 2018 tax year, the savings are even more significant. Those claiming single or married filing separately can claim a standard deduction of $12,000, but those who can claim head of household claim an $18,000 standard deduction. It's easy to see how the difference between head of household and single or married filing separately status can have a big effect on your tax bill.
Filing head of household can also mean paying less in your respective tax bracket. For example, for the 2017 tax year, a person making $100,000 that files separately or single will be taxed in the 28 percent tax bracket, while a person making the same amount but filing head of household will be taxed in the 25 percent tax bracket. For the 2018 tax season, although the 24 percent tax bracket is for income levels between $82,501 and $157,500 for everyone, the base tax is different. For single or married filing separately filers, the tax responsibility to $14,089.50 plus 24 percent of the income amount over $82,500. For those who file head of household, the responsibility is $12,698 plus 24 percent of income over $82,500. So, if two people both make $100,000, and one files single or married filing separately, and the other files head of household the person filing head of household will pay less in taxes.
Married Filing Separately
Head of household status offers a few extra advantages over the married filing separately status. You can't claim your standard deduction as a separate filer if your spouse itemizes deductions, but if you file as head of household, you can claim the standard deduction regardless of your spouse's deduction claims. Head of household status can also allow you to claim certain tax credits that aren't available if you file as married filing separately, such as a credit for dependent care expenses.
- IRS: Publication 501 (2018), Dependents, Standard Deduction, and Filing Information
- IRS: Publication 504 (2018), Divorced or Separated Individuals
- Forbes: New: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- Guide to Filing Taxes as Head of Household - TurboTax Tax Tips & Videos
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.