HOH for parents who are divorced but live together

[kamckinley]

Hi All,

I have an unusual client situation that I'd like to run by you. Client is a divorced couple that moved back in together after being divorced for a year. The husband has a child from a previous marriage. He is the custodial parent, the child lives with him full time and he provides all of her support. He claims her each year, the mother is not involved in the care of this child. So he can claim HOH for this child, no real questions on this one.

Here's the part where I need some direction. This couple has two children together. The divorce agreement says the mother claims the children. Since the parents live together, and the mother earns more than the father, I'm assuming she claims HOH for the two children they have together. So father claims HOH for the child he has from a previous marriage, and the mother claims HOH for the two children they have together. Is this correct? I believe they can both claim HOH in this case, but it's an unusual enough situation I thought I'd get another set of eyes to look at it.

Thanks!
Kristine

[Koss]

HOH Status

One of the requirements for HOH is that the taxpayer must have paid more than half the cost of keeping up the home.

If two taxpayers are living together as a unmarried couple, then there is only one home, and only one household. It is not a "roommate" type situation. You cannot argue that you have two single parents, living in the same house, each paying their own expenses, and maintaining their own household. It is one home, one household, and one family.

It is not mathematically possible for both taxpayers to have paid more than half the cost of keeping up the home.

They can't both be HOH.

BMK

[kamckinley]

One more wrinkle in this case... even though the mother earns more money and pays more than half of the housing costs for their two children together, the house deductions have been claimed by the father for the last two years. He kept the house when they originally divorced, thus we used the deductions on his tax return. Now that the mother is back living in the house, and the mortgage and house expenses are paid by both, I believe I need to split the deductions between them both from here on, correct? Oy, these people just need to get remarried! Thanks again.

[Koss]

Divorce and Remarriage

Did they get divorced for tax purposes?

The IRS now says that if you get divorced and then remarry the following year, and your only reason for divorce was because it was better for tax purposes, that you are still considered married for that year.

Doesn't sound like that's what this couple did, though...

BMK

[kamckinley]

No, I know this couple personally, believe me it was definitely not for tax purposes!

They are still divorced, so just to summarize how to treat this...

- only the wife qualifies for HOH
- split the house deductions between both since they live together again

Just want to make sure I'm treating this correctly.

Thanks so much!

[Kram BergGold]

H of H - It Depends

If two single people each with a child live in the same house, each pays their share of the household expense, each has their own bedroom (they are not involved), each feeds, clothes and displines their own child, then they can each be H of H. My guess is this is not your situation. I assume they are a couple. Given that, only the one that provides over 50% of the household expenses can be H of H.

[Koss]

Schedule A

Splitting the mortgage interest and property tax 50/50 is probably a reasonable way to do it, if they both contributed to the payment of those expenses.

BMK

[Gretel]

Splitting the mortgage interest and property tax 50/50 is probably a reasonable way to do it, if they both contributed to the payment of those expenses.

BMK

Maybe, but we do not know who the legal owner of the house is.

[DonB]

Who owns the house and is named on the mortgage? If she is off the title and mortgage, he would claim the house deductions.

[kamckinley]

They are both still on the mortgage and title to the house. Thanks!

[Lion]

He/she has to be legally obligated to pay (mortgage interest &/or property taxes) and has to actually pay. So, if they each pay 50/50 and are on the mortgage and are owners, then that's how you split it. But, if she paid 79%.... Follow the money.

[taxea]

Neither can file HOH if they live together and share the expenses.

[Kram BergGold]

A Bit Harsh

Taxea, I think you are being a tad harsh. If one spends one penny more than the other, then that person is H of H. If they both agree that A spent one penny mor than B then A is H of H.

[dtlee]

Taxea, I think you are being a tad harsh. If one spends one penny more than the other, then that person is H of H. If they both agree that A spent one penny mor than B then A is H of H.

Actually it isn't that harsh.

I have had clients insist that neither paid more and that everything was evenly and exactly split down the middle exact to the penny.

After explaining multiple times what the rules are and having them insist that everything was exact, if you tell them, "Fine, then both of you can only file as single," one of them will quickly remember the screw they bought or the key they had made or the box of Girl Scout Cookies that enables one of them to claim Head of Household.

[kamckinley]

Just a quick update on this thread...

Talked with the couple again and confirmed a few things:

House is in the father's name only, he pays all mortgage and house expenses.
Divorce agreement says mother claims their two children together (every year, no alternating between mother and father).
Father has a child of his own that he has sole custody of.

So, just to confirm the correct treatment:

Father is HOH and gets all house deductions. He qualifies for child tax credit and earned income credit for the child that is his alone.
Mother files as Single and gets no house deductions. She qualifies for CTC, EIC for the two children that they share, even though she is not HOH.

Is this correct? I am concerned about the EIC for the mother. Since the mother and father live together, the two children they have together can be qualifying children of either parent. Does that disqualify the mother from taking the EIC? If they didn't live together the children would be with the mother, but since they live together, they are both custodial parents. Ugh! I don't do many EIC tax returns, so this one is really stumping me.

Thanks again for all the comments, I appreciate the help!