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How it affects your tax return

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Your filing status is the backbone of your tax return, and checking the wrong box can be costly. Yet many filers still confuse single and head of household, financial experts say.

“Most people are not fully aware of the differences,” said Rose Swanger, a certified financial planner and enrolled agent at Advise Finance in Knoxville, Tennessee.

You can choose the single filing status if you’re not married. But if you’re financially supporting a dependent, you may qualify for head of household with significant tax benefits.

More from Advice and the Advisor:

Benefits of head of household

For divorced parents, it’s always better to file as head of household, said Linda Farinola, a CFP and partner at Princeton Financial Group in Plainsboro, New Jersey.

One reason is there are wider tax brackets, meaning it takes more income to reach each rate. For example, single filers may reach the top of the 12% bracket with $40,525, whereas heads of household may have up to $54,200.

Qualifying for head of household

While there are clear benefits for heads of household, there are strict eligibility requirements. “This is one area where the IRS is scrupulous,” said Swanger.

To qualify for head of household, you must be unmarried or living separately from your spouse for at least the last six months of the year. A temporary absence like school or work doesn’t count.

You must pay for more than half of the cost of maintaining a home, such as rent, mortgage interest, property taxes, utilities, repairs and meals at home. 

And you must have a “qualifying person,” such as a child, grandchild or other relatives, living with you for more than half of the year. A dependent parent doesn’t have to reside in your home if you cover more than half of their cost of living.

Both parents may qualify for head of household with two or more children, as long as one child lives with each parent for more than half of the year, providing more than half the financial support, said Sallie Mullins Thompson, a Washington, D.C.-based CFP and CPA at the firm with her name.

However, if there’s only one child, parents may alternate claiming the head of household filing status each year.

“If you plan ahead, both parents can save money and avoid mistakes,” Swanger added.

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