What is head of household?
Filing your taxes as head of household can help you land some sizable tax advantages. But how exactly do you qualify for head of household, and what are the qualifying criteria?
What is head of household?
Head of household is one of the five tax filing statuses that help decide the level of tax that you need to pay.
To qualify for this status, you must be legally unmarried, pay more than half of your household’s expenditures, and be responsible for caring for another who lives with you for at least half of the year.
Filing as head of household carries several significant tax advantages, making it a particularly attractive tax status. However, due to these advantages, legislation on how to file your taxes as head of household has changed. To qualify, you now need to undergo a more extensive qualification process.
What are the advantages of head of household?
As head of household, you can benefit from a wide range of different tax advantages. On the one hand, your standard deduction will be bigger than other tax filing statuses. Your standard deduction will be $18,650 – 50 percent larger than that of a single filer.
You will also be entitled to more beneficial tax brackets at lower income levels. For example, while single filers pay ten percent income tax up to $9,875, anyone filing as head of household pays the same tax rate up to $14,100. In essence, you’ll be keeping more of your own money.
To give you an idea of the different tax rates, here are the different tax brackets for 2023:
|2023 Tax Rate||For Single Filers||For Married Individuals Filing Joint Returns||For Heads of Households|
|10 percent||$0 to $11,000||$0 to $22,000||$0 to $15,700|
|12 percent||$11,001 to $44,725||$22,001 to $89,450||$15,701 to $59,850|
|22 percent||$44,726 to $95,375||$89,451 to $190,750||$59,851 to $95,350|
|24 percent||$95,376 to $182,100||$190,751 to $364,200||$95,351 to $182,100|
|32 percent||$182,101 to $231,250||$364,201 to $462,500||$182,101 to $231,250|
|35 percent||$231,251 to $578,125||$462,501 to $693,750||$231,251 to $578,100|
|37 percent||$578,126 or more||$693,751 or more||$578,101 or more|
Finally, being head of household also means it is easier to claim many tax credits and supports. Where eligibility for certain tax credits is conditional on income being below a certain level, you can continue to claim credits at a higher income level compared to single filers.
Who can claim head of household?
Due to the advantages afforded to this tax status, only certain people are eligible to claim it. This filing status is designed to provide an uplift to individuals with caring commitments and large spending outlays, which means you need to prove this is your status.
Firstly, you must be legally unmarried, including being single and divorced. Even if you are married, you can still be considered unmarried if you didn’t live with your spouse during the last six months of the tax year.
You must also live with a qualified person, usually a family member. You must provide at least 50 percent of the person’s financial support costs and at least 50 percent of the costs of supporting the qualifying person’s primary residence. Eligible costs include rent, mortgage, utility charges, groceries, insurance, and property taxes. Some costs, such as clothing, education, and transport, are not included.
What is a qualified person for head of household?
You can only file as head of household if you live with a qualified person – usually a family member dependent on your care.
If your qualifying person is a child, they must be no older than 19 or 24 if they are in full-time education. As long as you pay 50 percent of the costs of their home, a qualifying person can also be a parent, stepparent, niece, nephew, uncle, or aunt.
How do you file as head of household?
The head of household tax status is frequently misunderstood, leading to some households accidentally claiming this tax status when they aren’t eligible.
Leading from this confusion, lawmakers changed the process of qualifying for this tax status, resulting in new eligibility tests, such as the qualified person conditions set out above. While being head of household comes with many advantages, it’s important to be clear whether or not you should be filing as head of household or as an individual. But with your filing status clear, you can file your tax return as normal.
You can benefit from many tax advantages and credits when filing your taxes as head of household. But if you need additional help managing and organizing your finances, speaking to an independent financial advisor is wise.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.