First, your DP can only qualify as your tax dependent if you live together all 365 days of the year, you provide more than half the DP's total financial support, and the DP has less than $4050 of taxable income.
Your tax filing status is unaffected by claiming a DP on your company benefits. If you are legally unmarried, you file as single. Your DP always files a tax return in their own name for any income earned in their own name, and they file as single as well. If your DP has less than $4050 of income and does not file a tax return, you can claim them as a dependent, but this type of dependent does not allow you to file as head of household, only a child or other close relative qualifies you for HOH. You would still file as single, and the DP does not file at all (income too low).
•Note that if you also have a child (biological, legally adopted, or placed by a qualified foster care agency) and care for that child in your home, you may qualify to file as head of household. But if your DP has a child, you can't use that child to qualify for head of household because it is not related to you, and you can't claim the DP's child as a dependent unless it lives with you all 365 days of the year. Further, your DP can't file as head of household unless the DP care for the dependent in your home and pays more than half the livings expenses of the entire household.
If your DP does not qualify as a tax dependent, then any benefits the company provides to the DP are taxable income to you, as if you had been given a raise and used the money to provide the benefits. DP benefits are not tax-deductible or tax advantaged. This is called Imputed Income.
For example, let's say that your company's medical insurance cost for a single person is $500 per month, with the company paying $400 (and taking a corporate tax deduction) and you paying $100 as a pre-tax payroll deduction. The company will likely pay for a second single policy for the DP. You will pay your share of the $100 premium after tax, not before tax. In addition the company will assign you "imputed income" of $400 per month to cover the premiums that they are paying for the DP--because the DP is not a dependent, the money counts as taxable income to you. And since they are imputing you with extra monthly income, your federal, state, medicare and social security withholding will increase accordingly. The imputed income will show up on your W-2 at the end of the year as taxable income to you. This applies to the monetary equivalent value of any benefit provided to the DP, including medical and dental insurance, life insurance, disability insurance, maternity leave, or anything else. It must be counted as part of your taxable compensation.
The issue of imputed income for DP benefits goes away if you get married. Then you would claim tax-free spousal employee benefits, and you would file as married filing jointly. Any children belonging to your partner automatically become your children for tax purposes.
