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Can you file as head of household on your federal taxes?

Believe it or not but tax season is right around the corner. If you went through a divorce with children in 2014 or became a single parent, there are many important tax issues that you should consider before filing your 2014 federal income tax return.

One of the biggest issues you should address is whether you can file as head of household. Head of household is a federal tax filing status that applies to single and unmarried parents. The status typically allows the filer to be taxed at a lower rate and qualify for many additional tax deductions. 

You may be able to file head of household if you were unmarried as of Dec. 31, 2014, you earned at least 50 percent of your household's income that year, and your children lived with you a total of six months out of the year.  

Filing head of household may allow you to qualify for several child-related tax deductions and credits, including:

  • Dependent exemption of $3,950 for each dependent child (though fades out for parents earning $279,650 or more in income);
  • Child tax credits of $1,000 for each dependent child 16 or younger as of Dec. 31, 2014 (for single parents who earn $75,000 AGI or less);
  • Child care expense deductions of up to $3,000 for one child or $6,000 for two or more children (for single parents with an income or go to school full-time, though it fades out for parents earning $75,000 or more).

It’s also very important to determine whether you or your ex can claim your children as dependents. Under the IRS’s rules, a child is considered a dependent if he or she lived with and was financially supported by the parent for at least six months out of the year.

Your divorce decree or separation agreement likely addressed which parent is allowed to claim the children as dependents, and it might be different than the rules set out by the IRS. In that case, the IRS also allows the parent who would normally be able to claim their children as dependents to waive this right.

If you are unsure about what was decided during your divorce settlement, talk to your family law attorney for a refresher.

Source: Forbes, “8 Things Single Moms And Dads Need To Know About Taxes,” Emma Johnson, Jan. 26, 2015

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