Single vs HOH

[Dude]

Why would you advise a client to file HOH if their taxable income say below $20K negates any benefit. Isn't better to file single and skip the scrutiny of HOH?

[spanel]

I would file HOH. I think it looks worse that are choosing to skip the scrutiny instead of doing what is correct. Also, what about any state issues?

Chris

[Gretel]

I had a very unpleasant experience last year due to my you might call it "stupidity". I filed single for a TP claiming his mom because, somewhere along the line of years, I forgot that the standard deduction is also higher. I had to amend all the years, or better to say I paid him the difference since I did not want to open all the years again.

[ATSMAN]

Just follow the nice chart in TB Deluxe to determine the correct filing status. There is a misunderstanding that just because you are paying rent and "something" for your kids and you are single/divorced you are automatically Head of Household. The HOH status is the most abused and that is why IRS will be looking at those more carefully. I ran a report by filing status and HOH will need additional documentation.

[terryats]

If you check pub 501 concerning filling status it says "If more than one filing status applies to you, choose the one that will give you the lowest tax" You have the choice to file for whatever status you are qualified for.
There is no wrong choice and if it makes no difference in the TP tax, I have chosen the one that gives them the lowest tax prep fee.

[Dude]

I must be very confused:
Can you give specifics as to how an individual qualifying for "head of household" status would have a higher federal tax liability than an individual filing as "single"?
(Question assumes taxpayer meets all requirements to file as HOH or S and the two theoretical tax returns are otherwise identical.)
As for "skipping the scrutiny of the IRS," that might seem to be a pretty weak argument for not preparing the best professional tax return within the boundaries of the tax laws.

Now I am confused. I never said the tax liability would be higher but rather that more deductions go unused and are thus wasted. CTC would be unnecessary at certain income levels because HOH deduction eliminates the income. I am also confused as to why I am preparing the best professional return by insisting the client file HOH without a benefit.

[terryats]

As I posted earlier, Pub 501 states that a taxpayer has a choice of filing status if they qualify for more than one status. I charge more for HH than single, so if it makes no difference in tax why would you not use the single status. With the 2018 tax rates a single person with qualifying child can make $30000, and her tax is zero for HH or single

[kathyc2]

As I posted earlier, Pub 501 states that a taxpayer has a choice of filing status if they qualify for more than one status. I charge more for HH than single, so if it makes no difference in tax why would you not use the single status. With the 2018 tax rates a single person with qualifying child can make $30000, and her tax is zero for HH or single

How do you figure? With 30K income and one child single would have tax of 1,969 offset by CTC leaving 31 refundable CTC. HOH would have 1,200 tax offset by CTC leaving 800 refundable CTC.

[terryats]

You are correct Kathy, meant to type $20,000

[kathyc2]

You are correct Kathy, meant to type $20,000

Even at 20K there would need to be 2 children to not have a difference. I don't see the big deal of claiming HOH. If there are children you will need to fill out the 8867 anyway.

[TaxGuyBill]

Other things to consider:

1) Head of Household versus Single may affect the State tax return, even if it don't affect the outcome of the Federal return.

2) It is possible that filing status could affect the outcome of some non-tax situations, such as grants, government welfare/assistance, etc.. I am not specifically aware of one that it would affect (most look at income and number of people on the tax return), but most of those type of things DO look at your tax return, so that might be a factor.

[terryats]

Kathy, again you are correct. At $20,000 there is a $4.00 difference with one child, but as I charge by the form (in addition to the 8867 there is a HOH due diligence worksheet). client would have less $ after paying my fee if I filed client HOH vs Single

[kathyc2]

Kathy, again you are correct. At $20,000 there is a $4.00 difference with one child, but as I charge by the form (in addition to the 8867 there is a HOH due diligence worksheet). client would have less $ after paying my fee if I filed client HOH vs Single

You could discount the fee to make it the same as single. I'm guessing you spent more time calculating the tax for both statuses than it would take to ask if TP paid more than 1/2 cost of maintaining household.

Bill pointed out a couple potential trip points and I'll add a couple more.
1- If TP later gets another W-2 or 1099 they forgot about, the numbers won't work and you'll have to also amend filing status on amended return.
2- if other parent finds out TP filed as single, they may try to claim child as qualifying person on their return to claim HOH, which will cause your client to be questioned on EIC claimed.

[terryats]

Kathy you are missing the whole point of this post. If you look at pub 502 you will see a TP has the option of choosing any filling status they qualify for. There is no correct or wrong choice.

[Dude]

Even at 20K there would need to be 2 children to not have a difference. I don't see the big deal of claiming HOH. If there are children you will need to fill out the 8867 anyway.

Seems like it starts to make a difference after Earned income levels of $18000: Lower than this under HOH you get the full ACTC because no CTC was used; under Single you still have $1400 of CTC remaining ($18k minus 12 standard Ded = 6k taxable = $600. $2k -$600 = $1400).