Single vs. head of household: How it affects your tax return

Head of household offers wider tax brackets, a bigger standard deduction and faster eligibility for other write-offs.

Your filing status is the backbone of your tax return, and checking the wrong box can be costly. Yet many filers still confuse single and head of household, financial experts say.

“Most people are not fully aware of the differences,” said Rose Swanger, a certified financial planner and enrolled agent at Advise Finance in Knoxville, Tennessee.

You can choose the single filing status if you’re not married. But if you’re financially supporting a dependent, you may qualify for head of household with significant tax benefits.

Benefits of head of household

For divorced parents, it’s always better to file as head of household, said Linda Farinola, a CFP and partner at Princeton Financial Group in Plainsboro, New Jersey.

One reason is there are wider tax brackets, meaning it takes more income to reach each rate. For example, single filers may reach the top of the 12% bracket with $40,525, whereas heads of household may have up to $54,200.

Marginal tax brackets for tax year 2021, head of household

And with a larger standard deduction — $18,800 compared with $12,550 for single filers in 2021— your taxable income may be lower.

You may also qualify for other write-offs sooner, such as the third stimulus payment, the enhanced child tax credit or boosted earned income tax credit for 2021.  

“There are a slew of tax benefits that become a bargaining chip in divorce negotiations,” Swanger said. 

Qualifying for head of household

While there are clear benefits for heads of household, there are strict eligibility requirements. “This is one area where the IRS is scrupulous,” said Swanger.

To qualify for head of household, you must be unmarried or living separately from your spouse for at least the last six months of the year. A temporary absence like school or work doesn’t count.

You must pay for more than half of the cost of maintaining a home, such as rent, mortgage interest, property taxes, utilities, repairs and meals at home. 

And you must have a “qualifying person,” such as a child, grandchild or other relatives, living with you for more than half of the year. A dependent parent doesn’t have to reside in your home if you cover more than half of their cost of living.

Both parents may qualify for head of household with two or more children, as long as one child lives with each parent for more than half of the year, providing more than half the financial support, said Sallie Mullins Thompson, a Washington, D.C.-based CFP and CPA at the firm with her name.

However, if there’s only one child, parents may alternate claiming the head of household filing status each year.

“If you plan ahead, both parents can save money and avoid mistakes,” Swanger added.