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Discussion:HEAD OF HOUSEHOLD CLAIMED BY TWO UNMARRIED PARENTS IN THE SAME HOUSE

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Discussion Forum Index --> Tax Questions --> HEAD OF HOUSEHOLD CLAIMED BY TWO UNMARRIED PARENTS IN THE SAME HOUSE


KEVROB (talk|edits) said:

13 February 2006

Can two unmarried parents having four children between them actually file as head of household with the two parents claiming two separate children each?

I have two unmarried parents where the mother has two children with her last name and the father like same. They both share the same address and appear to meet the 4 head of household requirements/tests. The father and mother essentially share the expenses running the household and supporting their four children but they are not legally married and obviously can not file jointly. If the father files single and does not claim any dependents, his higher income and tax bracket will force him to pay a large amount of federal tax.

How is the best way to handle this for their best benefit while still being on the level with the irs? I am thinking that since the mother claimed all the children last year, have her sign form 8332 for what children she is not claiming this year and attach it to his return.

Please advise.

Thanks.

KAR

Riley2 (talk|edits) said:

13 February 2006
Since an HOH must provide more than one-half of the cost of maintaining the home, only one parent may claim HOH status.

They may not file Form 8332 since they lived together during the last half of the year.

In this case, only the biological parent may claim a Qualifying Child for any particular child who is under the age of 19 (24 if a student). For children who are over the age of 18 (23 if a student), only the parent who provided over one-half of the child’s support may claim the QR.

Yes, the rules are somewhat different this year.

Dan's Tax Service (talk|edits) said:

13 February 2006
I have a similar housing situation with new clients. Unmarrieds with four children: he fathered three (one of her two). Both clients earn approximately the same (she a little more); and, each bears the expenses for their own children (i.e. pays over one-half of costs for maintaining a home for their-own offspring). Both satisfy the HoH test requirements. I decided to do an honest job and e-filed each as HoH using their-own children as "Qualifying Child."; and, used the same home address for both.

Additional questions: (1) Since she owns the home - is he really a renter; (2) are $$$ alone factored into "costs of maintaining. . ." For instance, he in converting their garage into additional living space for the family. How do you factor in his labor and contribution to the "total" family environment?

It ain't getting any easier - many different situations out there. The best I can do is be honest with my clients and with myself.


I should have acknowledgements within 48 hours. We shall see. I'll keep you posted on my success/failure.

Riley2 (talk|edits) said:

13 February 2006
I am not sure that you can really justify two separate households here. Do they have separate utitilty bills, grocery bills, etc? I seem to recall a Tax Court case where this was allowed when the taxpayers actually maintained two separate "economic" households. I don't think you will have any trouble with the efile. However, I am not sure what will happen on audit.

Taxref (talk|edits) said:

13 February 2006
Riley2 is correct. While there can be 2 taxpayers who live under the same roof and maintain separate households, it must be a bona-fide situation. That tends to be rare. Riley2 also touches on another important point: just because the IRS accepts something on a return does not mean its correct. I could claim vet expenses for my dog as a medical expense, and the IRS might not question it. However, they would blow me out of the water on that issue if audited.

Dan's Tax Service (talk|edits) said:

13 February 2006
Good points Riley2 and Taxref. Thanks. As expected by Taxref - both of my e-files were accepted and DD refunds are expected soon.

Thought I'd share this one with you: A 70 year old lady lives with her 51 year old friend. Both work and earn >$25. The 70 year old controls the money and, therefore, she is the head of the household. I suggested she return to H&R - they've been filing her as HOH for years with her (now) 51 year old friend as her qualifying child.

Thanks - your comments will help me do a better job.

Pink Pearl (talk|edits) said:

17 November 2009
Old thread...different facts. I have a client (single mother of one child) who I have filed HOH and taken EIC in the past. Due to the economy, she allowed another single mother of one child to move in/share expenses in January of 2009. They both work at same company but different shifts so child care is available for them. They both earn about the same income and all income is spent supporting this household. To be eligible for EIC one has to qualify for HOH...so does the one who draws the short straw lose out on EIC this year? Something doesn't seem fair about this.....

Death&Taxes (talk|edits) said:

17 November 2009
Is Mom#2 on the lease? Is she subletting?

Pink Pearl (talk|edits) said:

17 November 2009
Mom # 1 rents 4 bedroom house month to month ($600 bucks per month)...no lease. Mom # 2 along for the ride and barely hangs on financially...

Kevinh5 (talk|edits) said:

17 November 2009
separate living space (bedroom and bath)? separate meals/food expense? separate phone?

Pink Pearl (talk|edits) said:

17 November 2009
everyone has their own bedroom (I think)...eat/buy/share food together/each has cell phone...

Kevinh5 (talk|edits) said:

17 November 2009
I think one starts to lose the HOH if she doesn't keep her own expenses separate.

Fsteincpa (talk|edits) said:

17 November 2009
See, why can't multiple unrelated people with their own kids, share a house and each maintain it as their own. We are not talking a boyfriend/girlfriend situation here. Mom 1 rents the house, Mom 2 sublets part of the house. The fact that they share costs does not mean that each one does not provide over 50% of the cost of raising their own children. Do the IRS regs require separate living space? I don't know the answer to that.

What is 4 single moms shared the cost of a large home? I do agree that a writeen agreement between the ladies might be helpful, but the fact that they share living quarters shouldn't disqualify them.

Kevinh5 (talk|edits) said:

17 November 2009
If the 4 moms (or even 2) are sharing one bed, it begins to look like they are not maintaining separate households.

Fsteincpa (talk|edits) said:

17 November 2009
But I don't believe there was any indication of such wonderful activity, unfortunately

Pink Pearl (talk|edits) said:

17 November 2009
well....they might have joined the other team...I didn't ask and they didn't tell.

Pink Pearl (talk|edits) said:

17 November 2009
but my understanding is that 4 bedrooms are furnished

EasternPA (talk|edits) said:

17 November 2009
Fred, Look at the worksheet on page 24 of Pub 17. Unfortunately, only one may claim. Note, that HOH translates into a $2550 deduction and has no other built in benefits. The Moms could alternate years, if they would both benefit.

A Single taxpayer whose AGI is less than $12450 ($5450 + $3500 + $3500 (one-child)) does not benefit by HOH. A parent with two children would need an AGI of $15950, with 3 children, $19400,... I tell my clients below these threshholds, it's probably in their best interest to not even claim HOH.

Pink Pearl (talk|edits) said:

17 November 2009
I'm talking about both being eligible for EIC.

EasternPA (talk|edits) said:

17 November 2009
>>To be eligible for EIC one has to qualify for HOH

Pearl, To my knowlege, there's no connection between EIC and HOH. Single and Single with children both can qualify.

CrowJD (talk|edits) said:

17 November 2009
Hire an architect and have him add another half onto the square footage of the house (in other words add another half a house). That way, each party could provide more than half of the support.

This is the cheapest way to go about doing it, but I must warn you, it will look strange from the street.

Pink Pearl (talk|edits) said:

17 November 2009
"Pearl, To my knowlege, there's no connection between EIC and HOH"  ???? Eastern, there are children involved and in order to qualify for EIC you must (if not married) file HOH to obtain EIC. Maybe I will direct Mom # 2 to find another preparer this year...

Fsteincpa (talk|edits) said:

17 November 2009
Eastern, I believe you are looking at it incorrectly. The fact that there is one roof and only one entrance into a domicile does not necessarily equate to one household. If I rent a room in a boarding house with just my son and myself, that is my household. It doesn't matter that 10 other boarders are also renters in that house. My household is my household and the other 10 boarders and what they pay do not factor in. If no one else is contributing to the raising of my son, I provide 100% of the cost of maintaining a household.

You need to get past the fact that these are shared living quarters. Each person is maintaining a separate household for their children. Granted, this is in situations where there is not a dating relationship.

Fsteincpa (talk|edits) said:

17 November 2009
Pink, as long as these are just two friends, each maintaining a separate, yet shared household, you are fine.

Fsteincpa (talk|edits) said:

17 November 2009
In my opinion of course. Others might disagree.

Kevinh5 (talk|edits) said:

17 November 2009
Fred, you will be arrested for drilling a peephole through your wall to watch the 4 moms in the next room. Word to the wise.

Fsteincpa (talk|edits) said:

17 November 2009
Kevin, I don't need no stinkin peephole. What do you think is in the TeddyCam I just sent over to them? I'm a high tech guy. lol.

But seriously, is my thought analysis incorrect on the two separate, yet shared homes?

Kirthe (talk|edits) said:

17 November 2009
<<"Pearl, To my knowlege, there's no connection between EIC and HOH"  ???? Eastern, there are children involved and in order to qualify for EIC you must (if not married) file HOH to obtain EIC. Maybe I will direct Mom # 2 to find another preparer this year... >>

HOH is not a requirement for EIC. With or without a QC.

(For a married TP not filing joint, to be considered eligible, he/she would need to meet the unmarried for tax purposes requirements, and which means meeting HOH requirements and filing as such.)

Marezidotes (talk|edits) said:

17 November 2009
Quote from Pearl: "Pearl, To my knowlege, there's no connection between EIC and HOH"  ???? Eastern, there are children involved and in order to qualify for EIC you must (if not married) file HOH to obtain EIC. Maybe I will direct Mom # 2 to find another preparer this year..."

Pearl, Since when? You may want to check the EIC qualifying factors again.

Kirthe (talk|edits) said:

17 November 2009
But to the other discussion of what is a household, maybe a separately claimed bed and bathroom? If not, I don't see how you could say two separate households if things are being shared...You also have to look at the expense requirements of maintaining a household...separate rent okay, but one shared mortgage would not do it, one utility bill...sharing that cost doesn't entitle more than one TP to claim over 50%, etc...IMO.

Marezidotes (talk|edits) said:

17 November 2009
The adult who provides over half the cost of maintaining the home can file HOH and claim her child as dependent and for EIC. The other adult will file as single (assuming they are single since your post says both of them are), claim her own children as dependents and get the EIC for them.

Marezidotes (talk|edits) said:

17 November 2009
I also agree with fsteincpa that there are instances where both might qualify as HOH, but be sure the expenses and records for "each household" can be separated easily in case of an audit. This is not really that hard to do, but it's funny how taxpayers say they can do it, but when it comes time to pony up the records, they have no idea how they would separate them. The single parent claiming HOH even if other claims single needs to be sure she has her records ready in case IRS wants to see them.

Fsteincpa (talk|edits) said:

17 November 2009
Kirthe, I disagree, how is that any different from when I had a satellite office in an insurance agency. I had an office in the agency. I paid him $200 a month, then he would tell me what my share of utilities was on a monthly basis.

That would indicate to me, that I am not allowed to take rent expense or utility expense in my practice. I was essentially sharing space.

Why is it different from two separate families sharing a household.

If you want to tell me they should better document the situation, I can buy that. I'd have the two of them create a formal agreement. that's one thing, but I'd love to see the IRS definition for a household.

Kirthe, whether shared mortgage, rent whatever. Each family/taxpaying unit is a separate and distinct entity from the others. Taking out outside individuals contributing to support. Explain to me how one mortgage or sharing a utility bill would disqualify them. I don't see it. But am willing to be converted.

EasternPA (talk|edits) said:

17 November 2009
Fred, You are being rational. Please cut it out. ;-)

These are tax laws and they make the distinction between domestic settings and business. Congress only wants to give $2550 per domicile. Some folks can pack them into one apartment: Grandma claims child A, Uncle Harry claims child B, Aunt Mildred claims child C, and Mom claims child D... Should that family then get $10,200?

EZTAX (talk|edits) said:

17 November 2009
I agree with Fred, If they are not sleeping together or otherwise related they are seperate households and can both be HH. My understanding is they must be seperate economic units - seperate bank accounts, holiday gifts etc.

Also agree with Kirthe and Marezidotes - no need to be hh for eic unless trying to not be mfs.

EasternPA (talk|edits) said:

17 November 2009
Sorry guys, need to get your minds back on tax laws. The Feds dont care who is sleeping with whom. It don't matter if its BF/GF, BF/BF or GF/GF. (However, the FBI and your MIL may.)

If they are not hetero-married (or in some cases, divorced / legally separated), it is immaterial.

Just check Pub 17 for the terms "having a good time", "sleeping with" or "Wesson Oil". They aint there!

Solomon (talk|edits) said:

17 November 2009
SCA 1998-041.

EZTAX (talk|edits) said:

17 November 2009
Thanks Solomon - that should clear some of this up! As Solomon's site shows, the matter is really if there are two seperate housholds (or economic units) sharing the home.

EasternPA - we joke around with this but as Solomon's site points out it is a facts and circumstances situation and the government does care where they are sleeping! -

"Under the facts presented, the shared dwelling constitutes the home of X and Y for the taxable year and the principal place of abode of X and Y’s children. The kitchen, and other living areas are common areas, but the adults have their own bedrooms. X and Y’s children share a room. However, other facts are necessary to establish whether X and Y conduct themselves as separate households or one household. Pursuant to § 1.2-2(c)(1), in order for X and Y to be considered

Fsteincpa (talk|edits) said:

18 November 2009
Actually EZ-Tax, I don't think it would matter that X and Y were sleeping together. The point of the case is that they are living together as two separate family units, each paying their own bills. The fact that the young nubile single mom is sharing my abode and bed is moot if she is also covering all her own expenses.

The situation in the case that wise solomon pointed out wasn't thrown out because they were sleeping together, but because there was no documentation to support that he was paying his own way.

It all comes down to how arrangements are set up and how the records are kept.

Fsteincpa (talk|edits) said:

18 November 2009
Apology accepted Eastern ;-)

EasternPA (talk|edits) said:

18 November 2009
Fred, I'll be darned! However, this is one forum where I'd better not admit to eating crow. So I'll take a small piece of humble pie with a scoop of vanilla.

Solomon thanks for that ref. I love those decisions that are "based on all the facts."

So just because they are sharing the same bed does not mean they not maintaining two separate families. They are just trying to cut down their heating costs. Ditto for showering together to save water. They just have to keep receipts to prove they divvied expenses.

I'll have a talk with the Missus tonight. She's curious about the stripe I painted down the middle of the bed.

Death&Taxes (talk|edits) said:

18 November 2009
"The Merckes contributed two-thirds of the total cost for food consumed on the premises, utilities and servant hire used by both the Merckes and the Flemings,"

Servants!!!!! Wonder whether it was the Flemings or the Merckes that filed household taxes?

I find it ironic how the Service uses all facts to determine this, but if a separated spouse is trying to claim HOH status, they and the Tax Court will throw it out because other spouse might have slept several nights on the couch. See Laurel Hopkins, T.C. Memo. 1992-326

Pink Pearl (talk|edits) said:

18 November 2009
My last comment on this is....why would anyone wish to file as single if they were qualified to file as HOH ???? That was the original premise of the question that I posed yesterday. Agree that a single person with children living > than six months could get EIC but depending on income the standard deduction/tax rates would work against them. Marezidotes comment seems to imply that boyfriend/girlfriend with multiple children living with them could both get EIC if one files as HOH and the other files single...Nice ! I like that.

Marezidotes (talk|edits) said:

18 November 2009
I thought it did more than "imply." If all other tests are met, they could both get EIC.

EasternPA (talk|edits) said:

18 November 2009
>>why would anyone wish to file as single if they were qualified to file as HOH ????

If they dont have enough AGI to benefit. Why raise the audit-me flag when it's of no benefit.

Rmcpherson (talk|edits) said:

9 February 2011
My quick finder has got me confused today.

Is it telling me that if two people living together with two children belonging to the mother with AGI of $35,000 would not be HOH if boy friend makes $45,000 and likly pays over half the cost of the childrens support and expenses.

Rgtaxservice (talk|edits) said:

9 February 2011
It all boils down to who pays over half the cost of the home. Support is not an issue. Mom claims the kids. Your scenario seems likely.

Costs need to be determined. Boyfriend may have expensive habits that eat up most of his income.

CrowJD (talk|edits) said:

9 February 2011
You'd have to prove that you had one house and then you built half a house onto it.

Tax Writer (talk|edits) said:

9 February 2011
Agree with Fred and EZtax.

It is possible for each to be considered a separate economic unit in some cases. If a child is NOT the boyfriend's child, that that child would be claimed by the mother regardless of any other facts. The custodial, biological parent ALWAYS has the right to claim the child over any other person.(Notice 2006-86 , Ex. 1) This child is not the qualifying child of anyone else. To an unrelared person, the child would only be a "qualifying relative."

If the issue is HOH, then look to the law. In the case of Child M (NOT the boyfriend's child, but the mother's biological child), is the mother providing over 1/2 the cost of household and living support for THAT CHILD? Then you have HOH. That's the ony real question here.

If HOH is not allowed because of the circumstances (say they co-mingle expenses and individual support cannot be determined) then EITC and other credits would be allowable regardless of the filing status, because the mother's child does not supply over 50% of his own support.

Taxaway (talk|edits) said:

10 February 2011
In this scenario, boyfriend does not have a dependent relative, so cannot be HOH.


Kyea (talk|edits) said:

8 March 2011

In mid-July a woman and her two children move in with what might be her boyfriend. He claims head of household with a dependent child. Can she, by living in the same house, also claim head of household?

Could she claim head of household due to her maintaining a home for more than six months before she moved in with her boyfriend?

EZTAX (talk|edits) said:

8 March 2011
First question is problematic and I would say no. Sounds like they have become a single economic unit.

Second question - yes, 1/2 the annual housing costs were paid by her before she moved in with boyfriend. Sounds like HH this year and not next - unless they find out it does not workout in the next few months  :)

Fsteincpa (talk|edits) said:

8 March 2011
She's obviously jumping from household to household and from one sugar daddy boyfriend to another. This will definitely not last the year, so make sure she tracks what she pays so you can document her ability to take HOH next year as well.

Richard23 (talk|edits) said:

7 June 2011
Have a different situation. Unmarried taxpayers filed in 2009 and 2010 as follows: Father of child single, mother of child as head of household. We did not prepare the tax returns. Facts are that taxpayer father is major wage earner ( over 1,500,000 in wages mother 10,000 in wages. Baby lives with taxpayer father and mother ( again unmarried for all of 2009 and 2010). Can I not file amended tax returns for both switching the head of household to father (the major wage earner) from the mother thus saving substantial tax dollars??? (single to head of household)

Kevinh5 (talk|edits) said:

7 June 2011
Richard, please fill in your profile, as requested to do before you posted.

1) Hopefully the other preparer didn't allow EITC on the mother's return. Potentially fraudulent if so, and certainly incorrect even if there wasn't an intent to defraud the US Treasury. Amend right away if a 'mistake' was made.

2) Have you considered whether there would even be any savings due to AMT?

Ddoshan (talk|edits) said:

7 June 2011
They probably gave the dependency to the mother for the EIC which would be substantial, more so I think, then If you gave the dependency to the Dad and filed him as HH. However, I don't quite see, in the situation you describe, how they could have filed Mom as HH. Based on the post it does not seem that filing her as HH would result in any additional tax savings then filing her as single.

Richard23 (talk|edits) said:

7 June 2011
No Amt that I can see. I want to change him to head of household by amending and remove her as head of household. He makes 1,500,000 she makes 10,000.

CathysTaxes (talk|edits) said:

7 June 2011
Kevin, I checked over and over again and did not see that when two unmarried people live together and split the children, that one or both cannot claim the EIC. If you have the source PLEASE provide it because personally this makes my stomach sick.

Kevinh5 (talk|edits) said:

7 June 2011
If the child is a child of both parents, the EITC rules state that for EITC purposes, the parent with the higher income is the one.

Do you do the 8867 form?

Death&Taxes (talk|edits) said:

7 June 2011
"Father of child single, mother of child as head of household. We did not prepare the tax returns. Facts are that taxpayer father is major wage earner ( over 1,500,000 in wages mother 10,000 in wages. Baby lives with taxpayer father and mother (again unmarried for all of 2009 and 2010)."

Are we all on the same page talking about ONE child and ONE mother? I think that is what is says but my mind is not clear.

Yellowdogduke (talk|edits) said:

7 June 2011
"IRC 152(c)(4)(B)

More than 1 parent claiming qualifying child. If the parents claiming any qualifying child do not file a joint return together, such child shall be treated as the qualifying child of--(ii) if the child resides with both parents for the same amount of time during such taxable year, the parent with the highest adjusted gross income."

Note this tie breaker rule (unlike the one for non-parents) only comes into play if both parents claim(ed) the child. See Example 9, Pub 17. (Yes, I know pubs are not authority. Why I cited IRC.)

In this case, I think mom would get EIC, but not HOH since it would be hard to prove she paid over half the costs of maintaining the home.

Okie1tax (talk|edits) said:

7 June 2011
Cathy, are you asking, If there are multiple children, the parents each claim a qualifying child, and other factors are met, income residence, etc., can each parent qualify for EITC?

Then yes. If there is only one qualifying child, and both parents claim the child as a dependent, then tie-breaker rules say only the higher AGI would qualify for EITC.

Yellowdogduke (talk|edits) said:

7 June 2011
Above answer only if Dad did not claim the child which I am assuming since he was filed as single. If he claims and files HOH, no EIC for mom.

EZTAX (talk|edits) said:

7 June 2011
"If the child is a child of both parents, the EITC rules state that for EITC purposes, the parent with the higher income is the one. "

Kevin this rule was changed many years ago. Perhaps you are confusing it with the current tie-breaker rules?

Agree with Ddoshan above that woman should not be HH since she is most likely not paying over 1/2 the housing.

If she is not married this would not change her taxes - she could still claim single and EIC.

You would have to run the numbers but I would not be surprised if the HH for him save more than the EIC for her but it will probably be close. I see know problem doing amended returns if it works out.

Death&Taxes (talk|edits) said:

7 June 2011
And if only the mother's name is on the lease, would he be head of household (presuming someone doesn't phony up some sort of sublet agreement after the fact)?

CathysTaxes (talk|edits) said:

9 June 2011
Okie1Tax, that is my interpretation as well. Two children, unmarried couple living together, each one taking a child, and noone is forcing the tie breaker rules.

Kevin, on the 8867 form, I do indicate if another parent can claim the child and the child's relationship. But as Okie1Tax asks, this case involves TWO children with each parent claiming one to get the EITC and one claiming HOH.

Fsteincpa (talk|edits) said:

10 June 2011
Higher income is only if there NEEDS to be a tie-breaker.

At $10,000 of income, shouldn't be any significant issue to switch her to single,m she still gets the EIC.

If multiple children of unmarried individuals living together, it is allowed under current tax law to spit the children in any manner the couple sees fit. Filing status is another matter, but yes, both parents, if eligible, can claim EIC.

It may not be right, but it's the way the law is set up.

Okie1tax (talk|edits) said:

10 June 2011
As long as there is a seperate qualifying child for each parent, then HOH as well as EITC, provided all other qualifications are met.

Fsteincpa (talk|edits) said:

10 June 2011
Agreed

RoyDaleOne (talk|edits) said:

12 June 2011
A taxpayer is treated as maintaining a household only if she furnishes over half of the cost of maintaining the household, which is the principal place of abode for more than half of the year of a qualifying child or an individual for whom the taxpayer can claim a dependency exemption, during the taxable year.

Now I ask how can two taxpayers both provide over half of the cost of maintaining the home?

Okie1tax (talk|edits) said:

12 June 2011
http://www.irs.gov/pub/irs-sca/1998-041.pdf

Tax Writer (talk|edits) said:

12 June 2011
Now I ask how can two taxpayers both provide over half of the cost of maintaining the home?

Two taxpayers living in the same domicile can be considered HOH if the facts and circumstances show that they are separate economic units. That's really the main issue, and the courts have agreed. For example, if you have two single mothers, each with their own children, splitting the costs of an apartment, I don't see how this is any different than each of them living in their own apartment-- the only difference is the lack of a permanent wall separating the two separate families.

How about this scenario-- two single taxpayers live together (unmarried). They each support a dependent parent. The dependent parents do not live with them. Now, each taxpayer is truly HOH-- because even though they live together, they each support the "household" that maintains the dependent parent.

There are many scenarios where this could occur, and still be technically correct according to the IRC. And also don't forget those tax court cases where money transfers were simply considered a "gift"-- for example, if they maintain separate bank accounts, but the boyfriend is giving the girlfriend wads of cash, then the money can also be deemed a gift, and therefore, household support provided by the girlfriend!

However, I agree that when there is no clear separation, (like in the case of two unmarried parents who co-habitate) then the parent who is maintaining the household must be determined, and the other parent's filing status would be "Single." But the taxpayer who files "Single" is not prevented from claiming their own child, especially if it is determined that one taxpayer is the true custodial parent-- remember, EITC and dependency defaults to the parent who lives with the child more days, regardless of who is maintaining the household financially.

RoyDaleOne (talk|edits) said:

12 June 2011
Taxwriter your answer presupposes that there are two separate family units. You skirt the question by creating two adobes or homes, not one.

And the main issue is not separate economic units, the issue is that unmarried parents are living in the same adobe.

Well I do see that you return the issue at hand.

Okie1tax (talk|edits) said:

12 June 2011
Office of Chief Counsel SCA 1998-041

Internal Revenue Service Released 12/04/98 memorandum

Issue (1) Whether two unmarried individuals, each living with their own dependent children in a shared dwelling, can each claim head of household filing status? (2) What expenses should be considered in determining whether each taxpayer furnished more than one-half the cost of maintaining a household? (3) What constitutes acceptable verification of expenses for the cost of maintaining a household? Conclusion (1) The determination of whether two unmarried individuals, each living with their own dependent children in a shared dwelling, may each claim head of household - 2 - filing status is not a matter simply determined by physical boundaries, but by all the facts of a case.

Fsteincpa (talk|edits) said:

12 June 2011
The instance of two unmarried people, with dependents, living together as one economic unit, then there can be only one HOH. Two families sharing a house is different.

that is why, in my above post, I said the one could claim HOH and the other single, but still claim EIC.

But, there are definitely instances where there can be multiple HOH's under one roof.

There was a very lengthy discussion on this previously.

RazorbackCPA (talk|edits) said:

7 February 2014
Two unmarried parents, 3 children together. Mom pays for a lot of expenses because she has money, but only earns $25,000 per year. Dad pays for a lot of expenses, and earns $40,000 per year. If I claim HOH and 2 dependents on her, and single and 1 dependent on him, I get the best results (but not by much).

I wouldn't mind giving that up and showing them all as her dependents, but I can see the IRS questioning whether she can really provide half the support. It appears giving up one dependent reduces the risk and save them a few hundred bucks. Trying to do the right thing, but also avoid any IRS issues.

She likely pays more than 1/2, but they don't really have the records to substantiate it. Everything is treated jointly and commingled.

Tax Writer (talk|edits) said:

9 February 2014
If I claim HOH and 2 dependents on her, and single and 1 dependent on him, I get the best results (but not by much).

Is there really much of a difference switching the HOH filing status to the Dad (higher income earner?). The dependency exemptions can go to either parent, and be split any way that gives them the best tax outcome.

The mom would still get EITC if she filed single with the dependents. That's probably what I could do if the expenses were co-mingled. The tie-breaker rules only come into play if the taxpayers cannot agree. So, the only arguable issue here is with the filing status.

Fsteincpa (talk|edits) said:

9 February 2014
Totally agree with TaxWriter here.

He can claim HOH and she can have all 3 as dependents.

Try it the various ways. Dependents split won't matter, the HOH vs Single might.

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