What are the laws on claiming head of household?

Question

My fiance's ex-wife's daughter from a previous marriage has been filing head of household for at least a few years (I'm really not sure how long exactly) and she is 21. She does work, but his ex lives in low income housing with her 21 year old daughter and their 8 year old daughter they had together. His ex is 43 years old and has not held a job in about 3 years for no reason in particular, basically because she doesn't want to. Her daughter is bringing in the income. He is going through a divorce now, which will be final next week and he will be able to claim their daughter every other year. However, the 21 year old daughter has been claiming her on her taxes by filing head of household. Is she allowed to do that? I'd appreciate if anyone could let me know! Thanks!

Answer 1

If the 21 year old is providing over half of her mom's support for the year, and the mom's income was under $3300 for the year, then the 21 year old daughter would most likely be able to claim her mom as a dependent, and can file as head of household because of her mom being her dependent.

Most likely, the 21 year old would also have been able to legally claim her 8 year old half-sister as a dependent also - not because she's filed as head of household, but because the 8 year old meets the rules for the 21 year old to claim her as a dependent as a qualifying child.

If the 21 year old wasn't able to claim her mother as a dependent, qualifying her for head of household, the 8 year old would have qualified her for head of household.

So yes, sounds like what she's been doing is legal.

I'm not sure why Sarah C says you could turn the stepdaughter in to the IRS - for what? She hasn't done anything wrong, by the info you provide.

Answer 2

rdp's research is excellent, but as with anything related to the Internal Revenue Code (IRC), there is always more to it.

Briefly, in 2005 new rules for "uniform definition of a Qualifying child". There are 4 elements:

Time in home-- must be MORE THAN half of the year.

Age-- must be under 19 or a FT student under 24.

Support--the child must not have provided more than half of her own support.

Relationship-- any direct descendent or sibling (including step-s & half-s) of taxpayer or descendent thereof. BTW, any relatoinship once established is NOT terminated by death or divorce).

So, assuming the 8 year old did not provide more than half of her own income the 21 year old has a qualifyng child. Because of the time in home test, fiance does not.

Now, here's an interesting twist-- unless the 8 year old (your fiance's natural daughter) lives with ex more than half the year, (ie if his ex and/or 21 year old have custody for more than half year), as long as the ex has no income the 21 year old presumably is providing more than half the support, which is one of the conditions for the custodial parent (the ex) to sign over the right to claim the child as dependent (NOT qualifying child for EIC or HOH). This can also be overcome if between ex & fiance they provide more than half of the 8 year old's support.

The IRC supercedes decree of the divorce court so, IRS might not recognize your right if the 21 year old claims the 8 year old. The facts are on her side. In fact they will not recognize the divorce decree at all if the ex does not sign it.

All of this is predicated on the assumption that the ex not working is equivalent to her having no income. If she does, then all of this needs to be re-stated taking the income into account.


Sorry, but time in home trumps everything.

Good luck!

Hank Roitman, EA

Answer 3

From the IRS regulations:

"Generally, to qualify for head of household status, you must be unmarried and you must have paid more than half the cost of maintaining as your home a household that was the main home for a qualifying person for more than half the year. You may also qualify for head of household status if you, though married, file a separate return, your spouse was not a member of your household during the last six months of the tax year, and you provided more than half the cost of maintaining as your home a household that was the main home for more than one half of your tax year of a qualifying person. "

A 'qualifying person" may be a step-sister as long as she meets the tests to be claimed as a dependent. From what you described it sounds like the step-sister meets the tests to be a "qualifying child" of the older daughter. She may, therefore, claim the step-sister on her taxes and file as head of household.

Answer 4

Tax laws change some from year to year--that's why even IRS workers can't tell you the right answer. From what you've said, she's the only one making money and could use the HOH status and the tax break that her mother couldn't. It's probably legal, but won't be much longer.

Your DH needs to claim his daughter and have the divorce papers saying that he can. You could turn in the step-daughter to the IRS for the reward, but that would be low--and she can't be making enough money for your reward to be much.

If she tries to claim the child for HOH in a year that your husband claims her, the IRS computer will flag both returns because the same SS # will be on both forms. Your husband's divorce papers make him the winner and the young woman will have to pay fines and, maybe go to jail, for tax evasion. A nice person, yourself, maybe, would warn her this fall to plan her taxes another way because she will get caught and it won't be fun.