IRS tax return under US tax laws can be filed in four ways-as Single person, as married couple filing jointly or as widow(er) , or married filing separately and as as Head of Household . The tax brackets for each of these types of filing of tax return are different. The deductions and exemptions are also fixed differently for these types of filing of IRS tax return. The Head of Household status is for a single or unmarried person who actually share certain kinds of person living with him. IRS calls those persons as qualifying persons . In the instant post , certain points related to filing of tax return as Head of Household is explained .
Benefits of Filing Tax Return as Head of Household
Lower tax rate and higher standard deductions are immediate benefits attached to the tax filing as Head of Household as compared to to filing of tax return as Single.
The tax bracket for the year 2016 for Single starts at $9275 attracting tax rate of 10% , then next tax rate is 15 % above that amount. In comparison, the tax bracket for Head of Household provides first slab upto 13,500 only 10% tax rate.
Similarly , the standard deduction for tax year 2016 to person filing tax return singly is $ 6,300 whereas for Head of Households , it is $9,300.
How to Know if You Are Eligible to File Return as Head of Household ?
In order to know if you qualify for filing of tax return as Head of Household , you must fulfill following conditions :
- You must not be married by December of the Tax Year .
- You must spend 50% of total house hold expense
- There must be an qualifying Persons living with you for at least half the year.
In the aforesaid conditions , there are two terms – household expense and qualifying persons which requires explanation for better understanding of its meaning in context of Head of Household status.
How to compute 50% of Household expense ?
The cost of keeping up a home should be found out by aggregating all the costs like rent,mortgage interest,insurance,property tax etc . Then halve the cost . Please note that it is not necessary that you actually pay half of the home expense. So, even if many in family pays some costs related to the home, you still qualify to claim having spent more than halve , if you incur a greater portion of the total cost . Similarly if any cost is met out of funds from public assistance programs, you may not include those amounts in the expenses you paid. However, you must still count these expenses toward the total cost of keeping up a home.
Who is Qualifying Person for Head of Household ?
Any of the following can be a Qualifying Person:
- A Qualifying Child who is single or even married child as long as you can claim exemption for them.
- Your mother or father, if you can claim an exemption for them. They are exempted from residing with you.
- Following relatives of you if they lived with you for more than half the year and you can claim an exemption for them.
- your child living with you or living in college or school campus , the cost of which is borne by you.
- stepchild, grandchild or other descendant of one of your children (or stepchildren or foster children),
- son-in-law, daughter-in-law, brother, sister,
- half brother, half sister, stepbrother, stepsister,
- brother-in-law, sister-in-law, parent,
- stepfather, stepmother,
- father-in-law, mother-in-law,
- grandparent, great-grandparent, and
- if related by blood, aunt, uncle, niece, or nephew.