If you’re a single parent with kids, you may be able to claim a more than $18,000 standard deduction when you go to file your 2018 taxes next year.
But there are a few things you need to know before you attempt to qualify for this new higher deduction!
Be sure you actually qualify for head of household status!
Not everyone who thinks they qualify will, in fact, qualify. Here’s what to keep in mind…
The standard deduction is much higher for head of household vs. individual filers
When the Tax Cuts and Jobs Act passed in December 2017, it revamped our nation’s tax code. That meant rejiggering the tax brackets and increasing the standard deduction to $24,000 for joint returns and to $12,000 for individuals, among other things.
However, for those who are newly divorced, widowed or otherwise single, the standard deduction when you go to file your taxes next year will be $18,000 if you can successfully claim head of household status.
And at more than $6,000 higher than the new individual standard deduction, head of household status is generally considered to be superior to individual filing status.
There are dependent residency requirements
Your child or children must live with you for more than half of the tax year. In addition, you must pay more than 50% of all household costs.
Divorce finalizations and/or custody arrangements may trip you up
In order to claim head of household status, you must be legally separated before the end of the 2018 tax year. Divorces that aren’t finalized by then will bar you from claiming head of household status in early 2019.
Furthermore, as a general rule, joint custody arrangements will negate the possibility of either parent claiming head of household. However, there is a little wiggle room here, according to CNBC.
For parents with two or more children who have a joint custody arrangement, each parent would have to spend a minimum of 6 months and one day with each child in order for both of the parents to take turns at claiming head of household.
We should note that parents must trade-off head of household status on alternating years (i.e. they can’t both claim it at the same time.)
There’s a juicy tax credit waiting for you if you make the cut
Head of household status gives you access to the Child Tax Credit, which reduces your tax liability dollar-for-dollar up to $2,000 per child. See if your child qualifies here.