Married taxpayers who want to file as head of household must satisfy additional criteria that unmarried taxpayers don't have to.
When you’re still legally married but no longer want to file taxes jointly with your spouse, filing a separate return is the only option. You can always claim the married-filing-separately status on your own return. But if you’re eligible to claim head of household instead, choosing this filing status affords you lower tax rates and a larger standard deduction.
Qualifying as Head of Household
To use the married-filing-separately status, the only criteria is that you be legally married. Claiming the head of household filing status, however, means you must be unmarried or “considered unmarried” by the Internal Revenue Service. If you are legally separated on the last day of the tax year, the IRS automatically treats you as unmarried for the entire year. All taxpayers wishing to claim head of household must pay more than half the cost of maintaining a home and live there with a qualifying person, such as a parent or child, for most of the year.
Married, but “Considered Unmarried”
You have to meet five tests to be “considered unmarried” for the purpose of using the head-of-household filing status. First, you have to file a separate return from your spouse; head of household can never be selected on a joint return. During the tax year, you must have paid more than half the total cost of keeping up your home, which includes rent, property taxes, food and utilities. Your spouse, however, cannot reside in this home at any time during the last six months of the year if you want to file as head of household; you must be legally separated. This home must also be the main home for your child, stepchild or foster child for most of the year. And you must be eligible to claim this child as a dependent on your return. If a single qualifying element isn’t met, you must file as married filing separately.
Advantages of Head of Household
Not being liable for your spouse’s income tax bill is a benefit of filing a separate return, regardless of the filing status you choose. For a married-but-separated taxpayer who is eligible, choosing head of household over married filing separately generally comes with a lower tax bill. This is the result of a larger standard deduction -- which means a bigger chunk of your income is tax free -- and more favorable tax brackets.
In other words, larger portions of your income are taxed at the lowest rates. In the 2015 tax year, for example, a married-filing-separately filer’s initial $9,225 of income is taxed at the lowest 10 percent rate, with excess income taxed in higher brackets. A head-of-household filer, however, enjoys the 10 percent rate on the first $13,150 of income. The married-filing-separately status also makes you ineligible for a number of tax benefits, such as the earned income, education and dependent care credits.