Being a single parent is tough. Whether you’re newly divorced or have a child with someone to whom you were never married, parenting solo can take a toll on you emotionally, mentally, and financially.
If you’re in this situation, your tax filing status is probably the last thing on your mind. However, you shouldn’t ignore this important issue. Filing your income taxes with the most beneficial status can result in a significantly larger refund – or less money due to the IRS. And as many single parents can attest, every penny counts.
As a single parent, you may be able to file as single or head of household. Here’s how to know which one applies to you.
Pro tip: When you complete your taxes using tax preparation software like H&R Block, you’ll be able to work with a live CPA or enrolled agent. They’ll be able to help you understand which tax filing status will reduce your tax liability.
Filing Status Overview
There are five tax filing statuses:
- Married filing jointly
- Married filing separately
- Head of household
- Qualifying widow/widower
The filing status available to you depends on whether you’re considered married or unmarried as of the last day of the tax year. You’re considered unmarried for the whole year if, on the last day of the tax year, you were either unmarried or legally separated under the laws of your state.
Married taxpayers can choose to file jointly or separately from their spouse. Unmarried taxpayers may be able to file as single, head of household, or qualifying widow or widower. Qualifying widow or widower status is available only to taxpayers whose spouse died within the last two tax years. You can read more about that filing status in IRS Publication 501.
Let’s examine the two filing statuses available to taxpayers who aren’t married or recently widowed.
Your filing status is single if you weren’t married on the last day of the tax year and don’t qualify for another filing status.
To be honest, there aren’t really any tax benefits to filing as a single person. For all but the top earners, the tax brackets available to single taxpayers are half that of those available to married couples filing a joint return, as is the standard deduction. Whenever possible, then, it’s better to file as head of household.
Head of Household
You can file as head of household if you meet all of the following requirements:
- You were unmarried or considered unmarried on the last day of the year.
- You paid more than half the cost of keeping up a home for the year.
- A qualifying person lived with you in the home for more than half the year, except for temporary absences, such as school. However, if the qualifying person is a dependent parent, they don’t have to live with you.
There are two definitions to unpack from the rules above.
“Keeping Up a Home”
First, let’s look at the cost of keeping up a home. Worksheet 1 in IRS Publication 501 is designed to help you calculate whether you paid more than half the cost of keeping up a home. The costs included when making this determination include:
- Property taxes
- Mortgage interest
- Repairs and maintenance
- Property insurance
- Food eaten in the home
- Other household expenses
If the total amount of these items paid by you is more than the total paid by others – including amounts covered by government assistance programs or child support – then you meet the requirement of paying more than half the cost of maintaining the household for the year.
As mentioned above, there are special rules for claiming head of household status when the qualifying person is your parent. If you can claim your mother or father as a dependent, you may be eligible to file as head of household even though they don’t live with you. In that case, you’ll need to pay more than half of the cost of keeping up the home that was their main home for the entire year. For example, if you pay more than half the cost of keeping your parent in an assisted living facility, that counts as paying more than half the cost of keeping up their main home.
A qualifying person can be a qualifying child or a relative who lived with you for more than half the year and whom you can claim as a dependent. That might include your child, stepchild, foster child, grandchild, father or mother, grandparent, sibling, or a descendant of any of those. Table 4 in IRS Publication 501 provides more details on who counts as a qualifying person.
To illustrate, let’s say Katherine is a single mom who was legally separated under Illinois law as of December 31, 2020. She paid more than half the cost of keeping up a home for the year. Her son, Jack, lived with her for more than half the year and did not meet the requirements to be claimed as a qualifying child by anyone else. For the tax year 2020, Katherine could qualify for head of household filing status.
On the flip side, Richard is a single father whose divorce was finalized as of December 31, 2020. He and his ex-wife lived apart but were not legally separated before their divorce. Richard paid more than half of the cost of keeping up a home, but his daughter, Anna, only stayed with Richard every other weekend. Although Richard was unmarried on the last day of the year and paid more than half the cost of keeping up a home, since Anna didn’t live with him for more than half the year, Richard cannot file as head of household. The only filing status available to him is single.
Benefits of Head of Household Filing Status
Trying to figure out whether you qualify for head of household filing status is complicated, but the tax breaks are worth it. Here are a couple of ways you’ll benefit.
More Favorable Tax Rates
As a head of household filer, you generally qualify for lower tax brackets than you would if you filed as single.
Consider the 2020 tax brackets for single versus head of household filing status:
|Rate||For Single Taxpayers, Taxable Income Over||For Head of Household, Taxable Income Over|
As you can see from the table, for the first three tax brackets, more of your income is taxed at a lower rate if you qualify for the head of household filing status.
Higher Standard Deduction
The standard deduction is much higher for head of household filers. For the tax year 2020, the standard deduction for a single filer is $12,400, compared with $18,850 for a head of household filer.
Let’s look at what these benefits would mean in real numbers. Say Sam is a single father who qualifies to file as head of household. On Sam’s tax return, he has an adjusted gross income of $50,000 and claims the standard deduction. If Sam chose to file as single, his taxable income would be $37,600 ($50,000 less the $12,400 standard deduction), and his tax would be calculated as follows:
- The first $9,875 is taxed at 10% = $988
- The next $27,725 is taxed at 12% = $3,327
As a single filer, Sam’s total tax liability would be $4,315.
However, if Sam took advantage of the head of household filing status, his taxable income would be $31,150 ($50,000 less the $18,850 standard deduction), and his tax would be calculated as follows:
- The first $14,100 is taxed at 10% = $1,410
- The next $17,050 is taxed at 12% = $2,046
As head of household, Sam’s total tax liability would be $3,456, a savings of $859.
With these benefits, it’s clear that filing as head of household is a much better option than filing as single.
Raising a child is expensive – even more so when you’re responsible for doing it on your own. That’s why it’s so important to choose a tax filing status that ensures you’ll pay no more than your fair share of taxes. Take the time to read through IRS Publication 501 and the requirements for using the head of household filing status. The tax savings will be worth the effort.