Research References:
Mertens: Tax Returns and Filing Status - Section 31A:96
Determined by marital status on December 31st. See IRC Sec. 7703(a)
Requirements:
Obtain final decree of divorce or separate maintenance by 12/31 (interlocutory decree is not final divorce)
Must file as Single or Head of Household
Married person may be eligible to file as Head of Household if spouse did not live in home for last 6 months of year. See IRC, Sec. 7703(b)
Requirements:
Paid more than 1/2 cost of maintaining a home for more than 1/2 the year for you and your qualifying child (other qualifying dependent)
You don't need to claim children as dependents to file as Head of Household
If you release dependency exemptions to former spouse, you may still file as Head of Household with one exemption for yourself (sign IRS form 8332 or similar statement to release dependency exemption (and under Age 17 Child Tax Credit) to non-custodial parent
If you are married and are eligible to file as Head of Household, your spouse must file as Married, Separate and you may itemize or claim standard deduction regardless of whether spouse itemizes or uses standard deduction. See Pub 504.
Note that the qualifying child must live with you in the home for more than 1/2 the year - If joint custody, be sure to keep records (diary or log) to show child was actually in home for more than 1/2 the year
The software will automatically determine if the itemized deductions used in the case are greater than the standard deduction and will use the larger amount.
The Basic Standard Deduction Amounts for 2008 are:
|
Single |
5,450 |
|
Head of Household |
8,000 |
|
Married, Joint |
10,900 |
|
Married, Separate |
5,450 |
Standard deduction amounts are increased if the individual is blind or age 65.
The tax calculation shows both amounts (Federal Tax Calculations, line 33 for itemized and line 34 for standard).
If both parties have a filing status of Married, Separate the software will look at the itemized deductions for both individuals and if one of them can itemize, it will force itemized deductions on the other person even if the itemized deductions are less than a standard deduction.
If one party is using Head of Household filing status, the software will check to see if the other party is Married, Separate.
The Head of Household spouse (pre-divorce situation) will always be allowed the greater of the standard deduction or itemized deductions (special exception to normal Married, Separate rule).
The Married, Separate spouse may use itemized deductions if these are greater than the standard deduction, but will be forced to use itemized deductions (even if less than a standard deduction) if the Head of Household filer is using itemized deductions.
Planning Reference. In pre-divorce situations it is usually better to have the non-custodial spouse (Married, Separate filing status) use itemized deductions (mortgage interest and taxes) so that the Head of Household individual may claim a standard deduction and the total itemized and standard deductions for both returns will be maximized.