Head of Household Requirements – 2013

taxesThere is no getting around the fact that divorce triggers lots of tax questions.  One of most befuddling of those new tax dilemmas for divorcing couples is the availability of the Head of Household filing status.  To clear up some of the mystery, here is some up-to-date information to help you decide what you should be negotiating for in your divorce settlement:

You can only claim Head of Household if:

You are unmarried or considered unmarried (see below under “Terms”) on the last day of the year,

  • You have paid more than half the cost of keeping a home for the year,** and
  • One or more qualifying persons lived with you in the home for more than half the year.

There are two exceptions to the residency requirement for temporary absences and for dependent parents:

Temporary Absences: During the period of temporary absences due to “illness, education, business, vacation, or military service,” the taxpayer and the qualifying person are still considered to be residing in the same household. To count as a temporary absence, “It must be reasonable to assume the absent person will return to the home after the temporary absence.  You must continue to keep up the home during the absence.” (IRS Publication 501)

  • Dependent Parent(s):  A parent can be a qualifying person even if the parent does not reside at the same home as the taxpayer.  The taxpayer must pay more than half the cost of keeping a home that was the main home for parent(s). (IRS Publication 501)

TERMS:

Unmarried: Taxpayer is legally separated (no such thing in Virginia), a decree of divorce/final order of divorce or a decree of separate maintenance has been issued by the court [IRS Code §7703(a)].

Considered Unmarried: A taxpayer may be “considered unmarried” for the purpose of qualifying for Head of Household tax status if:

  • he or she has a child, stepchild or foster-child residing at his/her home for more than half of the year for which he or she is entitled to a deduction (pursuant to IRS Code §151, 152) (even if deduction is given away with IRS Form 8332) [IRS Code §7703(b)(1)]
  • he or she provides for more than half the cost of maintaining a home for him/herself [IRS Code §7703(b)(2)], and
  • he or she is legally married, but has lived in a separate residence from spouse for the last six months of the year (July-December) [IRS Code §7703(b)(3)]

Deductions: A married person who files as Head of Household may choose either the standard deduction or itemized deductions (regardless of which method is used by the other spouse, if still married, which is the opposite of how the IRS does things when spouses file as “married filing separately” (where the two spouse’s choice of standard of itemized deductions must match).   (IRS Publications 501 & 504)

  COMPARISONS:

 Standard Deductions:

Single or Married Filing Separately: $5,950

Married Filing Jointly (or Qualifying Widow with Child): $11,900

Head of Household: $8,700

Tax Basis Comparisons

$30,000 Gross Income

Single 15%      HH 15%

$40,000 Gross Income

Single 25%      HH 15%

$50,000 Gross Income

Single 25%      HH 25%

$60,000 Gross Income

Single 25%      HH 25%

$70,000 Gross Income

Single 25%      HH 25%

$80,000 Gross Income

Single 25%      HH 25%

$90,000 Gross Income

Single 28%      HH 25%

$100,000 Gross Income

Single 28%      HH 25%

$125,000 Gross Income

Single 28%      HH 25%

$150,000 Gross Income

Single 28%      HH 28%

 

Posted by Elizabeth Downing Revell, Mediation Assistant and Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.

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