Rules for 'Head of Household' Get Stricter

Claiming a dependent child on a federal income tax form may sound like a straightforward matter, but some taxpayers have been bumping up against confusing definitions for years.

Congress, last year, brought together the five different definitions of the term “dependent child,” tightening the

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rules and making it simpler to determine whether to file taxes as the head of household.

Some taxpayers, who could file as heads of households in the past, can no longer do so for 2005 returns, the Washington Post reported.

Filing singly is a much more onerous tax status, and will likely translate into higher taxes. As the IRS put it on its website: “If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. You will also receive a higher standard deduction than if you file as single or married filing separately.”

Here are how the changes will affect some taxpayers. For example, single parents with an unmarried, adult child living with them can no longer claim head-of-household status. While it used to be allowed, even if the child were older and made a decent income, now the child would not qualify if he or she turned 19 by the end of 2005, the Post said.

Jackie Perlman, senior tax-research coordinator at H&R Block's world headquarters in Kansas City, Mo., told the newspaper that people in “complex family situations” would also be affected by the new rules.

A man and woman who are unmarried, but live together with the woman's young child, for example, may have to file taxes differently on their 2005 returns. If the woman has little or no income and the man provides for all three of them, he cannot file as head of household, as was permissible in years past. Under the new rules, the child is the “qualifying child” of the mother, not him.

"Under the old law, because the primary test was the support test, the man could have gotten head-of-household by supporting the child. Now the primary test is the relationship test, and he would fail that because there is a custodial parent who meets the test," said Mark Luscombe, a CPA and lawyer with CCH Inc., a tax analysis and publishing firm in Riverwoods, Ill.

Go to the IRS site for more detailed information. The head of household definition can be found at http://www.irs.gov/publications/p501/ar02.html#d0e2164

The uniform definition of a qualifying child can be found at http://www.irs.gov/formspubs/article/0,,id=109876,00.html#child_def_2005

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