Can Both Parents Claim Head of Household on Their Tax Return?

Determining the appropriate filing status on a tax return can significantly impact the amount of taxes owed or refunded. The “Head of Household” status offers benefits, such as lower tax rates and higher deductions, but it comes with specific eligibility requirements.

Filing Status Qualifications

To qualify for the Head of Household filing status, taxpayers must meet criteria set by the IRS. This status applies to individuals who are unmarried or considered unmarried at the end of the tax year and who have paid more than half the cost of maintaining a home for themselves and a qualifying person. A qualifying person is defined as a dependent child, parent, or other relative who meets residency and support requirements.

The distinction between being unmarried and considered unmarried is key. Taxpayers legally separated under a divorce or separate maintenance decree by the last day of the year are considered unmarried for tax purposes. Those who lived apart from their spouse for the last six months of the year may also qualify if they meet other conditions. This allows individuals in certain marital situations to benefit from the Head of Household status.

In shared custody arrangements, only one parent can claim Head of Household status for a given tax year. The parent who provides the primary residence for the child for more than half the year and covers more than half of the household expenses is eligible. This ensures the tax benefits go to the parent with the greater financial responsibility.

Household and Support Criteria

To claim Head of Household status, taxpayers must meet specific household and support criteria, which include household maintenance, dependent eligibility, and financial support thresholds.

Household Maintenance Requirements

A taxpayer must pay more than half the cost of maintaining the household. This includes expenses such as rent or mortgage interest, property taxes, utilities, repairs, and groceries. For example, if annual household expenses total $30,000, the taxpayer must contribute at least $15,001. Detailed records, such as receipts and bank statements, should be kept to provide evidence if audited.

Dependent Eligibility

A qualifying person includes a dependent child, parent, or other relative who meets IRS criteria. The dependent must live with the taxpayer for more than half the year, except in the case of a parent, who does not need to reside in the same household. The dependent must also meet the IRS’s relationship, age, and support tests. For example, a child under 19, or under 24 if a full-time student, qualifies if they do not provide more than half their own support. They must also be a U.S. citizen, U.S. national, or resident alien.

Financial Support Threshold

Taxpayers must provide more than half of the financial support for the qualifying person. This includes expenses such as food, clothing, education, medical care, and recreation. For example, if total support costs for a dependent are $10,000 annually, the taxpayer must contribute at least $5,001. Maintaining meticulous records of support-related expenses is essential for demonstrating compliance.

Potential Overlaps With the Other Parent

Navigating shared custody situations can be challenging when both parents wish to claim Head of Household status. The IRS allows only one parent to claim the dependent for this purpose in a given tax year, typically the one with whom the child resides for the majority of the year.

Issues can also arise if both parents contribute significantly to household expenses but neither meets the requirement to provide more than half the financial support. In such cases, detailed financial records are crucial to demonstrate compliance with IRS standards.

The Tax Cuts and Jobs Act (TCJA) has made the Head of Household status more appealing due to its favorable tax brackets and increased standard deduction. This has heightened the importance of understanding IRS regulations to maximize tax benefits.

Consequences of Improper Filing

Improperly filing for Head of Household status can lead to serious repercussions. The IRS closely monitors claims for this status, and discrepancies can trigger audits. If the IRS determines that a taxpayer incorrectly claimed Head of Household, the taxpayer may face a recalculation of their tax liability, often resulting in a higher tax bill. Interest charges on the underpaid amount may also apply.

Taxpayers may incur penalties, such as an accuracy-related penalty under IRC Section 6662, which amounts to 20% of the underpayment due to negligence or disregard of rules. In cases of suspected fraud, civil fraud penalties of up to 75% of the underpayment can be imposed.