You might think so, but the IRS has the final say during tax season.  The most grossly abused and misunderstood filing status on tax returns are individuals and even married couples who think that they qualify for the "Head of Household" status.  Just being the "head of your house" or "wearing the pants in the family" does not necessarily qualify you for head of household status.

Generally, to qualify for head of household status you must be "unmarried" (single or legally separated), and not be eligible to file as a "qualifying widow" or widower, and have a "dependent child".  You must also have provided more than half the cost of maintaining, where you live as your main home for a "qualifying dependent" (generally a blood relative or adopted child).

You may also qualify if you are legally separated and your spouse was not a member of the household during the last six months of the tax year.  You must have provided more than half of the cost of maintaining a household (main home) for a child who is a qualifying dependent.

A major problem faced by the IRS is when both separated parents claim head of household and both claim the child(ren).  If a "multiple support agreement" exists, then the spouse listed in the agreement takes precedent.  In the case where there is no agreement, the one maintaining the home will be granted the status.  Both will be notified by the IRS to provide proof.  School address records are the most fool-proof evidence of support.     

There are special rules for claiming your "parent(s) as a dependent(s)".  If your parent is a qualifying dependent, you may be eligible to file as head of household even if they do not live with you.  However, you must be able to claim an exemption for them.  Also, you must pay more than half the cost of keeping up their home.  If the parent has no filing requirement and the only income that they receive is a minimal amount of Social Security, go ahead and claim them, even if you aren't filing head of household. The IRS is hoping that you won't since it would be considered a lost exemption.  Lost exemptions save the IRS money and not you.  If the parent is in a rest home or nursing home situation and you are paying a major portion of the costs, claim them and use the status if you are eligible.  If you and your siblings are sharing support, take turns in claiming them.

Another important thing to remember is that U. S. citizens with a "nonresident alien spouse" are considered unmarried and cannot claim head of household.  The IRS does not recognize the spouse as a qualifying dependent since they do not have their U. S. citizenship.

As most "Baby Boomers" can attest, prior to 1970, "Head of Household" meant "the man of the house" or "the husband".  This is evident with published census records which always listed the head of household as the husband.  Recent "Census Bureau" statistics have proven this to no longer be true.

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Amazingly, single parent demographics show that the percentage of children with single parents rose from 23% in 1980 to 31% in 2002.  Here are some eye-opening statistics on the "single family household":

·        26% of U. S. children under the age of 18 years old live in a single-parent home (Archived at: http://www.census.gov/prod/2005pubs/p70-104.pdf). 

·        4.4 million is the number of U. S. male-maintained family household with no wife present.  That's 4.2 percent of all households. (Archived at: http://www.census.gov/prod/2005pubs/censr-20.pdf.

·        12% of U. S. family households are female-maintained with no husband present.  That hasn't changed for the past 15 years (Archived at:  http://www.census.gov/prod/www/statistical-abstract.html.

·        4% of U. S. family households are male-maintained with no wife present – a one percent increase since 1990 (Archived at: <U>http://www.census.gov/prod/www/statistical-abstract.html.

In 2006 the IRS began a strict enforcement of the "Earned Income Credit" and head of household status.  A large majority of EIC filers are also claiming head of household status.  The enforcement policy was enacted to stop the overwhelming nationwide abuse.  Remember, this branch of the federal government has access to all public and private (financial institutes, banks, etc.) records and can easily verify your living arrangement.  If audited and found to have erroneously filed, your social security number could be flagged for an indefinite period, and even though you may quality, you would not be allowed to claim either.  The audit can also mean the assessment of penalties, interest and the repayment of any refunds received. These assessments far exceed any reduction in liability or refund you may have been trying to achieve.  You may find yourself having to contact a Tax Resolution firm (Effectur: America's Premier Tax Debt Relief Solution) for "Tax Debt Help" to negotiate payment plans or help release an "IRS levy" (What to do if you receive a Levy Notice) or to prevent "Garnishments".

Gentlemen, you can keep your "social standing" and wear the pants in your household but  remember, Uncle Sam is not "gender specific" on who wears those pants when filing.

S. Raines, Sr. Tax Advisor/Preparer

The Senate Finance Committee found in April that more than 450,000 federal employees and retirees owe back federal taxes (totaling about $3 billion), including almost 5 percent of the employees and retirees of the U. S. Tax Court.  [U. S. Senate Committee on Finance (press release), 4-25-07].

"Tax Advocate" groups and "Tax Protestors" are having a field day with this issue.  With the IRS cracking down on middle class American's "tax debt", it appears to me that there is a double standard with the IRS.

Spreadsheets obtained by Washington, D.C., radio station WTOP under the Freedom of Information Act show that hundreds of thousands of government employees failed to file a tax return for the 2005 tax year.  No federal agency was exempt, though "tax compliance" varied from one agency to another.

Seventy-one employees in the Executive Office of the President, which includes the White House, owe $664,527 in taxes for 2005.  Approximately 20 of those employees have entered into an IRS payment plans, bringing the EOP balance down to $455,881 owed by 50 employees. 

"In the past, IRS officials have been quick to compare the federal workers' rate of compliance with the general public's. But this year, the IRS is not able to track the compliance rate for the general public." - WTOP

Documents proved that one-third of the employees, or 149,500, entered into payment plans with the IRS.  The United States Postal Service was the highest level of noncompliance, and the Treasury Department had the lowest level.

The IRS enters into a contract with new employees that make it a requirement to keep their 1040 filings and payments current or it is automatic grounds for discharge.  If the IRS does not enforce the provisions of their own employment contracts, how can they expect and pressure taxpayers to enter into payment arrangements.  Instead, they issue an "IRS Levy", Garnishment and even attach personal property?  

As a veteran Tax Advisor/Preparer, I have seen how the IRS deals with delinquent filers/payers.....smells like double standards and a "blind-eye" to me!

S. Raines

Senior Tax Preparer/Advisor

Effectur, Inc. (www.effectur.com) 

In 2006, the oldest members of the "baby boom" generation turned 60 years old.  The U. S. Census Bureau defines the baby boom generation as individuals born between 1946 and 1964.  All baby boomers share the same concerns about taxes ("tax debt"), finances ("IRS levy" and garnishments), and personal health.  The basis for this blog is to discuss and to provide definitive answers to how these concerns should be handled for the greatest benefit of each boomer to not only reduce their tax liability but to protect their dreams for the future.  

There are two items of personal wealth building, your homes and your pension/retirement plans, reflect your greatest assets.  Rapid rise in home values in many parts of the country is good news to many boomers who have seen their homes appreciate greatly.  This appreciation will help fund their retirement years.  Unfortunately, the news is not so good for traditional pension plans.  Many boomers began their careers at a time when most companies offered traditional pension plans.  In exchange for a certain number of year of service, the employer guaranteed a set pension (defined benefit).  That is no longer true.  Many boomers, who believed that their traditional pension plans would provide generous benefits for their retirement years, are discovering that they will not.  A record number of traditional pension plans is today being administered by the pension payer of last resort..the Pension Benefit Guaranty Corporation.

As a seasoned tax advisor/preparer for business and individual taxpayers, and an employee of a highly reputable tax resolution firm (www.effectur.com), I have found that a large majority of taxpayers are finding themselves hitting hard times and having to sell or having their homes foreclosed on by financial institutions.  They are also having to cash in on their retirement plans to make ends meet.  Did you know that the IRS can also take these highly held assets from you for delinquent taxes?

"Tax Help" is always available and "Tax Advocacy" websites are in abundance.  The best advice that any tax advisor or professional can provide is to educate yourself to protect your future and your dreams.