Introduction
When it comes to filing your taxes, one of the most important decisions you have to make is which filing status to use. The Internal Revenue Service (IRS) offers five different filing statuses, including single, head of household, married filing jointly, married filing separately, and qualifying widow(er). Two of the most common filing statuses are single and head of household. It’s important to understand the differences between these two filing statuses in order to get the most out of your tax return.
An Overview of Single vs. Head of Household Filing Status
The single filing status is the most basic filing status used by taxpayers who are not married or considered unmarried by the IRS. Unmarried individuals who qualify as head of household, however, can enjoy additional tax benefits compared to single filers. In order to qualify as head of household, you must meet certain criteria, such as having a dependent and paying more than half of the cost of maintaining your home.
Tax Benefits of Single vs. Head of Household Status
Single taxpayers are allowed a standard deduction of $12,400 for 2020, while head of household filers are allowed a standard deduction of $18,650. This means that head of household filers can reduce their taxable income by a larger amount than single filers. In addition, head of household filers can also benefit from higher income thresholds for the 10%, 12%, 22%, 24%, 32%, 35%, and 37% tax brackets. These higher thresholds mean that head of household filers can save more on their taxes by taking advantage of lower tax rates.
Income Requirements for Single and Head of Household Filers
In order to qualify as single, your annual gross income must not exceed $87,000. If your gross income exceeds this amount, you must file as head of household. In addition, if you are claiming a dependent, you must meet certain income requirements in order to qualify as head of household. Generally speaking, the income requirement is $15,500 or less.
How to Determine if You Qualify for Head of Household Status
If you meet the income requirements for head of household, you must also meet certain other criteria in order to qualify. For example, you must have paid more than half of the cost of keeping up a home for the year. This includes rent or mortgage payments, property taxes, insurance, utilities, and other expenses related to the upkeep of the home. In addition, you must be able to claim a dependent on your tax return. If you do not meet all of these criteria, you cannot claim head of household status.
Deductions and Credits Available to Single vs. Head of Household Filers
Head of household filers may also be eligible for certain deductions and credits that are not available to single filers. These include deductions for child care expenses, student loan interest, and tuition and fees. Head of household filers may also be eligible for certain credits, such as the Earned Income Tax Credit and the Child Tax Credit.
The Impact of Marriage on Single and Head of Household Status
If you are married, you cannot file as head of household. However, if you are unmarried but living with a partner, you may still be able to file as head of household. In order to do so, you must meet the same criteria as unmarried individuals, such as paying more than half of the cost of maintaining your home and being able to claim a dependent. If you do not meet all of these criteria, you must file as single.
What to Know About Dependents and Single vs. Head of Household Status
In order to qualify as head of household, you must be able to claim a dependent on your tax return. A dependent is defined as a qualifying child or relative who lives with you for at least six months of the year and who meets certain income requirements. If you are claiming a dependent, you must also provide more than 50% of his or her financial support during the year.
Who Can Claim a Dependent?
The person claiming the dependent must be related to the dependent in some way. This includes parents, grandparents, siblings, step-parents, and adoptive parents. In addition, the dependent must be either a U.S. citizen, U.S. national, or resident alien. If you are claiming a dependent who is not related to you, you must also meet certain criteria in order to qualify.
Tax Benefits of Claiming a Dependent
Claiming a dependent can provide a number of tax benefits, including a larger standard deduction, an additional exemption, and the ability to claim certain deductions and credits. For example, if you are claiming a dependent, you may be eligible for the Child Tax Credit or the Earned Income Tax Credit. These credits can significantly reduce your tax burden.
Conclusion
Choosing the right filing status is an important part of filing your taxes. Single and head of household are two of the most common filing statuses, and understanding the differences between them is key to getting the most out of your tax return. Single filers are allowed a standard deduction of $12,400, while head of household filers are allowed a standard deduction of $18,650. In addition, head of household filers may also be eligible for certain deductions and credits that are not available to single filers. Finally, in order to qualify as head of household, you must meet certain criteria, such as paying more than half of the cost of maintaining your home and being able to claim a dependent. Understanding the differences between single and head of household filing statuses can help you make the most of your tax return.
