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‘Head of household’ vs ‘single’: What are the differences and which is better for your tax return?

One key decision could reduce your tax liability and increase the tax credits and deductions that you are entitled to claim.

When will I get my tax refund from the IRS?

We are in the midst of tax season and filers will be looking for any way to reduce their tax bill and boost the size of their tax refund if possible. One of the most consequential parts of your tax return is your filing status and you should consider which is right for you.

Filers are sometimes unsure about the differences between ‘single’ and ‘head of household’ status, although the latter can offer significant tax benefits if you are able to claim it.

Anyone not married can opt for the single filing status, but if you are financially supporting a dependent then you may be able to qualify as a head of household.

What are the benefits of being a head of household filer?

Filing as a head of household essentially states that you have other members of your household who rely on you financially. If you are in this position the IRS offers more generous tax-filing terms, to such an extent that the status can be a bone of contention in divorce proceedings.

Here’s some of the key benefits of being a head of household filer:

Wider tax brackets – Heads of household have more lenient tax bracket thresholds, meaning that they can earn more money before tipping into the higher rate of income tax.

For example, single filers pay at a rate of 12% if their income is less than $40,525, but for heads of household they can enjoy that low rate up to a taxable income of $54,200.

Larger standard deduction – The standard deduction is the amount of money you can earn before having to pay income and, once again, the threshold is considerably higher for head of household filers.

For the 2022 tax year the standard deduction for single filers is $12,950, as opposed to $19,400 for heads of household.

Access to additional tax write-offs – Filing as a head of household means that you have a legal tax dependent, which opens up the possibility of claiming additional forms of tax relief.

For example, the Child Tax Credit and Earned Income Tax Credit require claimants to be either a head of household or part of a married couple filing jointly.

Who is eligible to file as a head of household?

With these extra benefits there are, understandably, additional eligibility requirements to claim the status. To file as head of household you must:

- Be financially responsible for more than half of household expenses

- Not be married on the final day of the related tax year

- Have at least one qualifying child or other tax dependent

In the case of divorced or legally separated parents, the parent with legal custody of the child is typically the one able to file as head of household.