Q. What is the effect of claiming "head of household" status
in a tax return?
A. Head of household does not apply to joint tax returns. If you are divorced,
or if you are married filing separately, you may be entitled to claim
HH status. This is also often referred to as HH/MLA (married living apart).
There are important tax advantages to filing HH/MLA. It is not an exemption,
but a filing status just like filing "married," "married
filing separately," and "single."
To qualify you must be separated from your spouse during the last 6 months
of the calendar year and have at least one child living with you for more
than 50% of the time. You may well pay less taxes to the IRS if you can claim it.
There is an extremely important piece of knowledge here that many attorneys
and most family law judges seem to forget or ignore: In situations where
each parent has exactly 50% custody of the children, neither can file
HH/MLA. 50-50 custody is a common shorthand way to characterize true joint
physical custody arrangements. But to be eligible for this filing status,
the custody cannot be exactly the same for each parent; if you presently
share custody per a equal custody order, you would do well to modify the
order (and even alter slightly your actual custodial timeshare). All you
need do to avoid this problem is give one parent 50.1% custody and the
other 49.9%, particularly in any orders that are drafted and filed with
the Court. Squabbling over these percentages is a waste of time and money
- it will not hurt you to be the 49.9% parent.
If there is more than one child, then parents can modify the parenting
schedule so that each can claim one in order to maximize each party's
tax savings and the support dollars.
Your filing status is important to your spousal and child support rights
Family Code § 4059(a) requires that child support orders be based upon accurate tax filing assumptions,
and the support programs (the Dissomaster, Xspouse) similarly require
a status to be selected before a support number can be rendered.
For a payor spouse, the child support will be less if the filing status
is Single than it will be if the status is HH/MLA, but if you truly file
Single the costs paid to the government will likely exceed any perceived
savings on child support. This is because a person has more net disposable
income after taxes when they are HH/MLA or even MFS than when they are
Single. In the same way, the child support may be less for a parent claiming
HH/MLA depending upon their income but if they have little income the
HH/MLA may have little or relatively little economic value to them.
This is a good example of how
Collaborative Divorce can be used to benefit separating spouses. Money can be saved for both
parties where they structure their dissolution to maximize tax benefits
and minimize tax consequences to each - which nobody typically considers
or does in the midst of a hostile, contested divorce.
The IRS benefits when couples are at war! In a mediated or collaborative dissolution, neutral tax experts can be
consulted and used to design agreements that save the higher earning parent
money while increasing the cash available to the supported spouse and
for children. Would you not rather give money to your kids than to Uncle Sam?
Thurman W. Arnold III