Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
HOH w/o claiming dependent
Can anyone point to a reference that says definitively that it is or is not a requirement that a taxpayer claim at least one dependent in order to file as HOH? There are many references that say the taxpayer must have someone that qualifies as a dependent, but I can't find a reference that states that the dependent must be claimed on the tax return.
A single taxpayer supports and provides a home for 1 grandchild and all requirements for this child to be her dependent are satisfied. Having the dependent would qualify her for HOH status but she does not want to claim the child so as to avoid SRP for the child. (Ignore the many arguments for claiming the dependent.)
Re: HOH w/o claiming dependent
In Pub 501 under Head of Household --> Qualifying Person it states
"You must be able to claim an exemption for the child. However, you meet this test if you can't claim the exemption only because the noncustodial parent can claim the child using the rules described later in Children of divorced or separated parents (or parents who live apart) under Qualifying Child or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative. The general rules for claiming an exemption for a dependent are explained later under Exemptions for Dependents."
If you could, but are not claiming the person as your dependent, a described above, tell the IRS who that person is at Form 1040 line 4. If e-filing, also provide that person's SSN.
Re: HOH w/o claiming dependent
The rules are actually pretty clear.
The ONLY time your taxpayer can claim HOH for a grandchild without claiming the exemption is if a) the parent of that child also lives in the household and b) the parent is eligible to and does sign the form 8332 giving the exemption and child tax credit over to the non-custodial parent.
If this is a 2 person household (grandparent and grandchild), the taxpayer is automatically responsible for the SRP whether or not they claim the exemption on their tax return. They might as well file HOH and claim the exemption as it will lower the total owed.
Yes, the tax return will be processed without the child on it, but the IRS is supposed to apply the tie-breaker rules after the fact, assign the dependent to the "winning" taxpayer and bill them for the SRP.
"b. Liability for Shared Responsibility Payment
i. Liability for Dependents
Under section 5000A(b)(3)(A), if an individual with respect to whom the shared responsibility payment is imposed for a month is another individual's dependent (as defined in section 152) for the taxable year including that month, the other individual is liable for the shared responsibility payment for the dependent. The proposed regulations clarify that a taxpayer is liable for the shared responsibility payment imposed with respect to any individual for a month in a taxable year for which the taxpayer may claim a personal exemption deduction for the individual (that is, the dependent) for that taxable year. Whether the taxpayer actually claims the individual as a dependent for the taxable year does not affect the taxpayer's liability for the shared responsibility payment for the individual."
Note the part about whether or not they claim the dependent.
Returns filed as HOH with no dependent are supposed to be crosschecked with form 8332 to ensure the dependent was claimed correctly.
Lastly, for folks with really long memories, prior to 2005, one could file HOH with a non-dependent. Eg, 80 year old mom paying all bills with 50 year old child living with her, even if child made more than she did.