If you are separated or divorced from your child’s other parent, it is likely you will want to file your federal income taxes as head of household. This filing status has many benefits for parents. But if you are divorced, only one of you can claim this filing status.
Tie-breaker rules when you cannot agree
Of course, if you and your child’s other parent can come to an agreement on your own as to who will claim your child as a dependent for the purpose of filing as head of household, this is often for the best. The Internal Revenue Service (IRS) tends to honor such arrangements.
But the IRS will not let both of you claim the child as a dependent for the purpose of filing as head of household. So, there are tie-breaker rules in place for determining which of you can claim this benefit.
If you are divorced from your child’s other parent, the IRS will allow the parent with whom the child lives with the majority of time to claim the child as a dependent for the purpose of filing as head of household. Generally, this is the parent who has sole physical custody of the child.
If you are divorced from your child’s other parent, and your child lives with both of you an equal amount of time, the IRS will allow the parent with the greater adjusted gross income to claim the child as a dependent for the purpose of filing as head of household. Generally, this is the case if you share joint custody equally.
Benefits of filing as head of household
There are benefits to filing as head of household post-divorce. Providing you are eligible, you can claim a larger standard tax deduction than you could if you were filing as a single individual.
Filing as head of household also improves your chances of qualifying for other tax credits and economic impact payments related to parenthood. Filing as head of household can really help you out financially, especially if you have a lower annual income.
If you and your child’s other parent can agree on which of you will file as head of household post-divorce, it can save a lot of stress come tax time. And keep in mind, if you cannot come to an agreement, the IRS will do it for you.