Question

You are a CPA paid to prepare tax returns for various clients. One of your newest clients is a “blended family”. Both adults are separated and each claims Head of household filing status. Each taxpayer also claims a different child for the HOH status. All individuals in this family use the same address. Discuss how you would handle this situation.

Answer 1

To claim the status of Head of Household one must meet three important criteria which are as follows :

1. The Unmarried Test : Here one has to be unmarried at end of the year which includes if the person is single, divorced, legally separated or if they are “Considered Unmarried” which means they are still legally married but lives in a separate residence then there spouse for at least last six months of the year.

2. The Support Test : Where basically one has to prove that they pay more than half of the qualifying Cost for keeping up the house. Which includes expenses like rent or mortgage interest payments, property taxes, property insurance, repairs, utilities, and groceries and not other costs like education and clothing etc. as provided in law. So here one must be paying 51 % or more of the cost of keeping house to be qualifying in the Support Test.

3. The Qualifying Dependent Test : Only certain close relatives can be considered as the qualifying person who must be living in the same house for more than Half the year. Such close relatives will include Your Child, adopted child, foster child, Step child, Brother , Sister or any descendent of these above mentioned individuals.

Further it will include your Parents, Grand Parents, Nephew or Niece whom one can claim as their dependent.

There can be exception to the rule that these dependent individuals is not residing in ones house in cases like hospitalisation, business vacation, military service or education but then it should be reasonable to assume that the dependent will be back to home after the temporary absence and till then you have to keep the house up.

Another exception is in case when your father or mother is dependent on you but do not live with you but in such cases you have to meet the support test and prove them to be your dependent by paying more than half the cost of keeping them in a rest home or home for elderly.

So, Here in the given case we can say that both the spouses can not meet the Support test, though they are positively meeting the other two tests, as both cannot be practically paying more than 50 % of the Cost of keeping the House.

Hence in the given situation it is advisable that only one of them be filling the return with the status of Head of Household and other shall fill in status of Single as per there mutual Understanding.