The modern American family comes in all different shapes, sizes and types. On the very same street, you might find a married couple with two young children, a grandmother raising a grandchild, a single father with a teenage daughter, and an older couple taking care of an elderly aunt. The Internal Revenue Service (IRS) requires all Americans who earn income to pay federal income tax, but it charges a lower tax rate to unmarried individuals who are the primary financial support of children, parents and other relatives. For tax filing purposes, these individuals are called heads of household.
In the U.S., heads of household pay a significantly lower tax rate than single filers at the lower- to middle-income brackets. For example, in 2020, the 12 percent tax bracket for single filers covers all income from $9,876 to $40,125. For heads of household, the 12 percent bracket extends from $14,101 to $53,700. For earnings above that threshold, tax rates for single filers and heads of household are identical [source: Orem].
According to the IRS, you should file a tax return as a head of household if you're unmarried and pay more than 50 percent of the cost of keeping up a home for yourself and a dependent or other qualifying individual [source: IRS]. On the surface, this sounds simple enough, but this is the IRS we're talking about, so let's break down each requirement in more detail.
First, you need to be unmarried or "considered unmarried" on the last day of the tax year. Unmarried means you were never married or are legally divorced. "Considered unmarried" is a little trickier. You are considered unmarried if your spouse didn't live with you for at least half of the year. That excludes "temporary absences" like education (college, for example), illness and military service. If you and your spouse have a dependent child, the child must live with you for more than half the year. You and your spouse must also file separate returns [source: IRS].
Secondly, you must pay more than 50 percent of the cost of keeping a home for you and your dependent(s). To figure this out, you need to add up the total cost of maintaining the home, add up your contributions and see if you pay more than half of the total. Expenses to include are:
You shouldn't include costs like clothing, education, medical expenses, transportation or vacations.
What else do you need to qualify as head of household?