Is Head Of Household The Right Filing Status For You?
Standard deductions, qualifications, and tax brackets differ depending on whether you file as a single person or as the head of household. If you're single and unmarried, you qualify as single, whereas if you have a qualifying child or relative living with you and pay more than half of the costs of your home, you qualify as head of household.
Your filing status is the backbone of your tax return and ticking the wrong box can be costly. Despite this, many filers continue to mix up single and head of household, according to financial experts.
What Is The Head Of Household Filing Status?
Head of Household filing status permits parents or individuals with qualifying dependents who pay more than half of the expense of maintaining a house for a qualified person to claim a higher standard deduction and pay fewer taxes than single taxpayers or married couples filing separately.
What Are The Requirements To File As Head Of Household?
To qualify, there are three guidelines the IRS expects you to meet if you would like to file as head of household.
You must be considered unmarried, divorced, or legally separated
You must pay more than half of the costs of household expenses
You must be living with dependents (child, grandchild, or other relatives for more than half a year)
The amount of your standard deduction differs significantly depending on whether you file as a single or head of household. The standard deduction is $12,550 if you're single but $18,800 if you file as head of household for the 2021 tax year. Deductions reduce your taxable income for the tax year, which can help lower your tax bill or increase the size of your tax refund. If you don't itemize on your tax return, the standard deduction will apply.
If you file as head of household, you will be taxed at a lower rate than if you filed single. You are able to claim a higher standard tax deduction on your tax return as well. This is because you are supporting one or more individuals in addition to yourself. As a result, the government will reduce your tax burden as it does for married couples with children. For the right circumstances, this might make the head of household a very beneficial tax status for the right situation.
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