TOP QUESTIONS ON FILING FOR HEAD OF HOUSEHOLD

No tax declaration further confuses taxpayers than filing for the head of household. When you heard the term, what do you think? Nonetheless, it's not so simple. Many rules come with filing for the head of households. While this can maximize tax savings, you should follow IRS guidelines to avoid a possible review or consultation by the IRS. Below is a summary of what head of household entails and if you can be qualified to file for one.

Maintaining a Household

The first requirement to make a declaration is that you must have paid more than half of the family's maintenance expenses during the fiscal year. This means that more than half of household bills, including food, insurance, loans, repairs, mortgages, rents, property taxes, and other household expenses that ought to be paid.

If you receive financial support for your family expenses from a parent or another person, you can still file for HOH as long as you pay more than 50% of all expenses with your savings, income, or other benefits. 

The Unmarried Test

Usually, a taxpayer must be alone on the last day of the year to declare himself/herself a supporter of the family. This means that you are alone, divorced or legally separated from a separate maintenance order issued by a court. You may be considered "alone" if you are still legally married, but have lived in a separate residence from that of your spouse for at least the last six months of the year, from July 1 to the end of December.

You must submit a separate income statement for your spouse, and you must always meet the other two criteria: the supporting document and the qualification test of the staff.

You ought to have paid more than half the cost of maintaining your home during the year.

To be considered as the head of household, you must have paid more than half of a family's maintenance expenses during the year. The costs included in determining this determination include Real estate tax, Rent, Mortgage interest, Utility, Food consumed at home, Home Insurance, Property taxes, and repairs.

Do not include costs for: Clothes, Transportation, Education, Life insurance, Mortgage, Health or health insurance premiums, Services provided by the taxpayer or other family members.

If the overall money paid by the taxpayer is greater than the amount paid by others, including amounts paid by state aid or food aid programs, the taxpayer fulfills his obligation to pay more than half its maintenance costs during the year.

A frequent question is: "can there be more one head of household in one house? Yes, it is possible. There can only be one household per family because you have to pay 51% of the family's total expenses. But there could be more than one family in a house. If there are more families and each taxpayer pays more than 50% of his family expenses, it is probable that more than one taxpayer will get the head of the household status, even if they live in one house.

Consider a taxpayer who moves with a friend and they both have children. The payer and his friend have rooms and bathrooms, do not share purchases, do not vacation together and do not pay rent or utilities. In this case, it also appears that there are two distinct families and that the taxpayer and the friend can return the HH storage status if they meet the required conditions. But everyone should prove that all the HOH requirements are met.

Qualified child

The requirement for a dependent or a qualifying child goes beyond the child. To be considered as a qualified child, the child must meet the criteria for each of the following categories:

• The child must be a biological child, an adopted child, a son-in-law, a brother, a half-brother or a descendant (son, grandson, great-grandchild, etc.) from one of these parents.
• The child must have lived at home for more than six months during the exercise.
• The child must be younger than you.
• At the end of the year, the child must be less than 24 years of age if he/she is a full-time university student or under 19 years of age if he/she is not a student.
• The child should not have paid more than half of the expenses during the fiscal year.

Tools to determine the filing status

The internal revenue service has on its site a file status application called What is my filing status? This web application takes about five minutes and can help you determine if you are eligible or not. Most tax preparation software will ask a series of questions and assess your status. Or you can talk to a tax consultant

The bottom line

Before completing an application as a head of household, be sure to carefully review the internal revenue service guidelines to avoid a difficult audit or consultation in the future. Although you may be considered the head of the household, your definition and the definition of the IRS can vary considerably.