Due to the complexity of this situation, taxpayers who feel they qualify for head of the household status even though they share the same address with another taxpayer should seek advice from an enrolled agent or certified Tax Professional before filing their tax returns. These professionals are trained to analyze situations and provide tax advice.
Looking for an instant answer to a question?
- If we're married filing separately, do we need to add our incomes together on each return?To fulfill the married filing separately requirements, you’ll each report your own income separately.
However, if you live in a community property state, you must report half of all community income and all of your separate income on your return. Community property states include:
- New Mexico
Community property is a property that you, your spouse, or both acquire:
- During your marriage
- While you and your spouse are living in a community property state
Separate property is a property that you or your spouse:
- Owned separately before your marriage
- Earned while living in a non-community-property state
- Received separately as a gift
- Bought with separate funds
- Acquired through separate funds
The laws of your state govern whether you have a community or separate property and income.
You must attach Form 8958 to your tax form showing how you figured the amount you’re reporting on your return.
- Can two roommates who each have their own children claim head of household filing status at the same address?Can two people, who both live at the same address, each qualify for the head of household filing status(HOH)?
This seemingly simple question has a very complex answer. In order to answer the question, it’s important to keep in mind the criteria to be eligible for head of the household status:
- The taxpayer must be unmarried,
- The taxpayer must be able to claim as a dependent a closely related person,
- That closely related person must actually reside at the same residence as the taxpayer for more than half the year
- The taxpayer must pay for more than half the cost of maintaining the residence.
When two (or more) taxpayers share the same address, the question sometimes arises whether the address itself constitutes one household, or whether each family living at that address constitutes its own separate household.
The Internal Revenue Service analyzes the situation based on all the facts and circumstances. The IRS’s general thinking is outlined in a memorandum from the Chief Counsel’s office (SCA 1998-041, pdf 9 pages). In their advice, the IRS outlines their thinking over whether two persons sharing the same residence can each qualify as head of household.
What does “a household” mean?
The underlying tax law, Internal Revenue Code section 2(b), and the IRS’s interpretation of that law, Treasury Regulations section 1.2-2, state that, among other things, a taxpayer must “maintain as his or her home a household….” This phrase “a household” is what generates the tax issue.
Does “a household” mean one single residential structure, or does “a household” have less a physical meaning and refer to economic units living inside the residence?
The IRS has adopted the perspective that “head of household filing status is not a matter simply determined by physical boundaries, but by all the facts of a case.” In other words, just because two families share the same physical address, that does not automatically mean they cannot both be head of household.
Instead, people will need to carefully analyze the actual circumstances of their situation.
Taxpayers who share the same physical address will need to prove whether they “conduct themselves as separate households or one household” and especially “whether each family acts independently of each other in matters not related to the house.”
Some factors that would weigh in favor of there being two separate households sharing the same residence might include:
- Are there separate telephone lines for each family? Separate utility bills?
- Do the taxpayers maintain separate finances and separate bank accounts? Or do they have a joint account or commingle funds?
- Does one family contribute to the financial support to the other?
- Do the adult taxpayers have separate bedrooms?
- Do the children have separate bedrooms?
- Do the family members give Christmas and birthday presents together or separately?
As you might surmise from these questions, the IRS will attempt to figure out whether the taxpayers act as a family unit, or whether the taxpayers act as separate from each other. The more that two taxpayers act like they are in a family relationship, the less likely the IRS will allow both taxpayers to claim head of household.
Professional Advice Recommended
- If my spouse and I file separate returns, does the person who claims the child also get to claim all of the child expenses and child tax benefits?
Yes, if you are married filing separate, the spouse who claims the child as a dependent will also claim all the other tax benefits associated with the child. These benefits include:
- Child tax credit
- Exclusion from income for dependent or dependents care benefits, but the maximum amount is half the normal allowed.
However, you can each claim the medical expenses that you paid for your child if you’re itemizing deductions.
Note: The credit for child and dependent care expenses is normally not available for MFS returns. And the EIC is never available for MFS returns.
You and your spouse can’t agree to split benefits between yourselves
- If my spouse owes back taxes, will his tax debt affect my return?
Yes. The IRS can apply all or part of your joint refund to your spouse’s legally enforceable past-due debt.
You can file Form 8379: injured spouse allocation to recover your share of the joint refund if:
- You filed a joint return.
- The joint return had a refund due — all or part of which will be applied against your spouse’s back taxes.
- You aren’t legally obligated to pay the debt — your spouse is the only one who owes the debt.
- You reported income (Ex: wages, taxable interest) on the joint return.
- You did one or both of these:
- Made and reported payments like federal income tax withholding or federal estimated tax payments
- Claimed the Earned Income Credit (EIC) or other refundable credit on the joint return
The IRS must review your return to allocate part of the refund to you and part of your spouse’s back taxes. It usually takes 11-14 weeks to process your refund.
- If my spouse and I file separate returns, does the person who claims the child also get to claim all of the child expenses and child tax benefits?
Accordion three content
- What is a Form W-2?
Form W-2: Wage and Tax Statement reports your wages and taxes withheld from your wages. Your employer is required to give you a 2016 W-2 by Jan. 31, 2017. Your employer keeps a copy for recordkeeping.
A copy of your W-2 is sent to:
- Social Security Administration (SSA)
- State or local governments for which taxes are withheld
You’ll refer to some of the W-2 boxes to complete your return. Some W-2 boxes are for informational purposes only.
Box a: Employee’s Social Security number — If the number is incorrect due to a typographical error:
- Report it to your employer immediately
- Get a corrected W-2
All payments withheld from your wages are credited to the Social Security number (SSN) shown. If your SSN in the payroll system — and on your W-2 — is incorrect, your employer must fix this. An incorrect SSN means your payments aren’t credited to you for:
- Income tax
- Social Security
Box b: Employer’s federal ID number — This is your employer’s identification number with the IRS. It’s the equivalent of your SSN or individual taxpayer identification number (ITIN). This number must be valid and match the IRS’s records if you want to e-file your return.
Box c: Employer’s name, address, and ZIP code — If you work for a corporation, this is usually the address of the main office or headquarters. It’s not necessarily the building where you work.
Boxes e and f: Employee’s name and address — Your full name and current address
Box 1: Wages, tips, and other compensation — The taxable amount of compensation your employer paid you. This includes:
Enter the amount in this box on Forms 1040 and 1040A, Line 7, or Form 1040EZ, Line 1.
Box 2: Federal income tax withheld — The total amount of federal income tax your employer withheld from your wages. Enter the amount in this box on:
- Form 1040, Line 62
- Form 1040A, Line 36
- Form 1040EZ, Line 7
Box 3: Social Security wages — The amount of earnings your employer paid you subject to Social Security tax. This doesn’t include tips. This amount might be more than the amount in Box 1 if some income subject to Social Security tax isn’t subject to income tax. Ex: Amounts you contribute to a tax-deferred retirement plan like a 401(k) or a 403(b) plan.
For 2016, the total of Boxes 3 and 7 shouldn’t be more than $118,500.
Box 4: Social Security tax withheld — The amount of Social Security tax withheld from your wages. For 2016, this amount can’t be more than $7,347. This amount should equal 6.2% of the amount in Box 3.
If you worked for more than one employer, the total withheld might be more than $7,347. If so, the excess is treated as a tax payment. This payment will increase your refund or decrease your balance due. See Form 1040, Line 69.
Box 5: Medicare wages and tips — The total amount of earnings your employer paid you subject to Medicare tax. There’s no limit on the amount of wages that might be subject to Medicare tax.
Box 6: Medicare tax withheld — The amount of Medicare tax withheld from your wages. This amount should equal 1.45% of the amount in Box 5.
Box 7: Social Security tips — This lists the tips you received that you reported to your employer. Box 7 and Box 3 combined are used to figure the Social Security and Medicare tax you owe on tips you didn’t report to your employer.
Box 8: Allocated tips — The amount of tips your employer allocated to you. This amount is in addition to the amount you reported, which is in Box 7. The allocation is usually based on credit card receipts and IRS formulas.
If you have an amount in this box, you might need to complete Form 4137 to pay these taxes on the amount:
- Social Security tax
- Medicare tax
You usually must include the amount in taxable wages, Box 8 on your return. To learn when you might not need to report this amount, see Publication 531.
Box 10: Dependent care benefits — The amount of your wages used to pay for dependent care expenses under a Section 125 plan. This is also known as:
- Cafeteria plan
- Flexible spending arrangement
This amount isn’t included in Box 1. File Form 2441 to see if any part of this amount is taxable.
Box 11: Nonqualified plans — The total payments you received from your employer’s nonqualified retirement plan. This amount is included in Box 1 and is taxable.
Boxes 12a, 12b, 12c, 12d — These boxes are used for various reporting purposes. Some of the letter codes and their meanings include:
- A — Social Security tax your employer couldn’t withhold since there wasn’t enough tip income to cover the tax. Include this amount in the total you enter on Form 1040, Line 60.
- B — Medicare tax your employer couldn’t withhold since there wasn’t enough tip income to cover the tax. Include this amount in the total you enter on Form 1040, Line 60.
- D — Pre-tax contributions to an employer’s 401(k) plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount. To learn more, see Publication 525.
- E — Pre-tax contributions to an employer’s tax-sheltered annuity plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount. To learn more, see Publication 525.
- F — Pre-tax contributions to an employer’s salary reduction Simplified Employee Pension (SEP) plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount. To learn more, see Publication 525.
- G — Pre-tax contributions to an employer’s Section 457(b) retirement plan. This amount isn’t included in Box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount. To learn more, see Publication 525.
- J — Amount of sick pay not taxable since you contributed to the plan.
- K — 20% excise tax on excess golden parachute payments. To learn more, see Total Tax in the Form 1040 Instructions.
- L — Amount of substantiated employee business expense reimbursements. This amount is nontaxable to you. If you’re deducting expenses more than this amount, complete Form 2106.
- M — Former employees only. Uncollected Social Security or railroad retirement benefits on taxable cost of group-term life insurance over $50,000.
- N — Former employees only. Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000.
- P — Amount of moving expense reimbursement paid to the employee. This amount is neither taxable nor deductible. It isn’t included in Boxes 1, 3, or 5.
- Q — Amount of nontaxable military combat pay. Treat this amount as earned income for these purposes:
- Earned Income Credit (EIC)
- Additional child tax credit
- IRA contributions
- R — Employer contributions to your Archer medical savings account (MSA). Report it on Form 8853.
- S — Pre-tax contributions to an employer’s SIMPLE plan. This amount isn’t included in box 1 and isn’t taxable to you. However, if you worked for more than one employer, you might be taxed on a portion of this amount.
- T — Adoption benefits not included in Box 1. Complete Form 8839 to figure any taxable and nontaxable amounts.
- V — Income from exercise of nonstatutory stock options included in Boxes 1, 3 (up to the Social Security wage base), and 5. For reporting requirements, see Publication 525 and the instructions for Schedule D.
- W — Employer contributions you report on Form 8889. Include amounts you contributed using these:
- Section 125 (cafeteria plan)
- Health savings account (HSA)
- Y — Deferrals under a section 409(A) nonqualified deferred compensation plan. This amount is also included in Box 1. It’s subject to an additional 20% tax plus interest.
- AA — Designated Roth IRA contributions under a Section 401(k) plan
- BB — Designated Roth IRA contributions under a Section 403(b) plan
- DD — Cost of employer-sponsored health coverage. This amount isn’t taxable.
- EE — Designated Roth IRA contributions under a governmental Section 457(b) plan.
To learn more, see Publication 525: Taxable and Nontaxable Income at www.irs.gov.
Box 13: Statutory employee, retirement plan, third-party sick pay — One of the boxes will be checked if it applies to you:
- Statutory employee — If you’re a statutory employee, your W-2 should show Social Security and Medicare tax withheld. No federal or state taxes should be withheld.
- Retirement plan — If you’re considered to be a participant in a qualified employer retirement plan, this box will be checked. This is true whether or not you contribute to the plan. If this box is checked, your deductible IRA contributions might be limited.
- Third-party sick pay — If you received payments for sick pay from a third-party provider, this box will be checked. Premiums paid by your employer will be taxable to you. Amounts paid from your own contributions won’t be taxable.
Box 14: Other — This is used by your employer to provide you with additional information. It might or might not affect your return. Items commonly reported in this box include:
- Union dues
- United Way contributions
- Health insurance premiums deducted
- Educational assistance programs
- Tier 1 and Tier 2 railroad retirement contributions
- Lease value of vehicle provided to an employee
- State disability insurance tax withheld
- After-tax contributions to 401(k) plans — but not designated Roth IRA contributions
- Wages from disposing of stock acquired by exercising incentive stock options (ISO)
Box 15: State — This includes:
- Postal abbreviation of the state for which taxes were withheld
- Employer’s state identification number
Box 16: State wages, tips, etc. — The amount of your wages subject to state tax. This amount might differ from the amount shown in Box 1.
Box 17: State income tax — The amount of tax withheld for the state in Box 15
Box 18: Local wages, tips, etc. — The amount of your wages subject to local income tax. This amount might differ from the amount shown in Box 1 or Box 16.
Box 19: Local income tax — The amount of tax withheld for the locality in Box 20. This amount is entered on the appropriate line of your local return.
Box 20: Locality name — The description of the place — like a city or town — that also withheld taxes.
To learn more, see these tax tips:
- Your Paycheck
- Your First Job
- Who is Self-Employed?
Generally, you are self-employed if any of the followings apply to you.
- You carry on a trade or business as a sole proprietor or an independent contractor.
- You are a member of a partnership that carries on a trade or business.
- You are otherwise in business for yourself (including a part-time business)