Here is the scenario. I am a middle-class, single parent and live with my two children (minors) who each receive $12k in social security benefits per year (that's their total income which is untaxed). I have tried to complete the IRS 'Support Test for Dependent Child' worksheet but I'm not sure how to account for everything exactly since money is so fungible. I can say that the "fair rental value" of our home (which is paid off) is $42,000/yr and our total living expenses are in the normal range.
So my question is, does my filing as 'Head of Household' with two dependents seem reasonable in my case given the info provided above, or could this filing status raise a red flag with the IRS?
The biggest uncertainty for me here is how the child's $12k social security benefit income is treated by the IRS--is it enough to pay over 50% of the child's support (and thus disqualifying the parent from HOH status)? I believe this can be a gray area since not all of the social security amount (if it indeed figures in the support total) may be allocated specifically toward support. (It's a moot point though if the child's total combined support amount is over $24k since the parent would pay over half ($12k+) in any case.)
Thx
