Do i qualify for head of household if me and my fiancé live with his parents but pay for or own stuff like food and basic living expenses?

[caron1981]

Me and fiancé live with his parents along with our two kids. We pay for our own stuff like food and basic living expenses. House and utilities are in their name but we do give the money for it in cash. Since He has child support being pulled out of his check and brings home less for our household living I pay for all the basic needs such as Food, bathroom goods, clothes and so fourth. Can I still file head of house hold? I've heard of people being asked to show proof by the irs. If I get asked that how do I show proof since we share the same bank account and we pay parents in cash? I just want to be prepared if I get ''reviewed''  I've already filed my return and was accepted on January 30th but I hear they can stop your return at any time, even after they give out a DD date to review your.

[Opus 17]

First, once your return is accepted, you can't make any changes other than by filing an amended return (by mail) that takes 4-5 months to process.  You heard wrong about making after--the-last-minute changes.

The concept of a "household" is complicated.  It covers not just a house or apartment, but who lives there and how you live your lives.  See this for the official IRS thought process on the matter.  https://www.irs.gov/pub/irs-sca/1998-041.pdf

You probably have facts that go both ways, you need to consider the situation as a whole, and how you would prove it if audited.

From this article https://www.thebalance.com/two-heads-of-household-3193038

Proving that Two Separate Households Share the Same Address

Taxpayers who share the same physical address will need to prove whether they "conduct themselves as separate households or one household" and especially "whether each family acts independently of each other in matters not related to the house."

Some factors that would weigh in favor of there being two separate households sharing the same residence might include:

• Are there separate telephone lines for each family? Separate utility bills?
• Do the taxpayers maintain separate finances and separate bank accounts? Or do they have a joint account or commingle funds?
• Does one family contribute to the financial support to the other?
• Do the adult taxpayers have separate bedrooms?
• Do the children have separate bedrooms?
• Do the family members give Christmas and birthday presents together or separately?

As you might surmise from these questions, the IRS will attempt to figure out whether the taxpayers act as a family unit, or whether the taxpayers act as separate from each other. The more that two taxpayers act like they are in a family relationship, the less likely the IRS will allow both taxpayers to claim head of household.

[caron1981]

We have separate finances, separate bedroom for all of us ( it's huge house ) We have our own Christmas in the mornings just us then with the parents later in the day and we do birthday stuff as normal or like everyone else. We just don't have utilities in our name because we don't need to as it's not our house. Our cell phones are on their plan because they get a killer deal that saves us way to much money to get our own.  Me and My fiancé have a joint account that we pay from though.

[AmandaR1]

Yes, it sounds like you may qualify for Head of Household, so long as you pay for more than half your costs to run your home and you claim a dependent. 

You need to keep records of all the expenses you paid, to validate your status. You can do this by getting copies of your bills and noting how you are allocating your full share, how much you paid, when and how paid. 

See page 8 at the IRS pub for costs of maintaining a home: https://www.irs.gov/pub/irs-pdf/p501.pdf

Learn more here: https://ttlc.intuit.com/replies/3288637

[caron1981]

We pay them in cash so there's really not a trail of checks or credit card receipts to follow to show proof. Is it considered  50%  or more then everyone in the house including his parents or just my family ie. kids and fiancé. If it includes everyone in the house then, no, they do well over 50 percent. I just do over 50% of my family that lives there.

[AmandaR1]

Documentation can be as simple as writing down everything that would be on a receipt (amount, date, how paid(cash/check #), why paid). If requested from the IRS, you will need to create this. If you are renting or using a portion of the house, you need to allocate the costs (paid by you and not paid by you) to that portion. If you are not paying rent/house mortgage, then you'll need to allocate the portion paid by them (if any), to your portion of the home. You can do this based on square footage. Then, evaluate in total if you are paying more than 50%. Depending on the costs of the home (if any) and everything you spend on other living expenses, it's certainly possible to pay more than 50%.

[AmandaR1]

*Updated* comment response.

[caron1981]

Gotcha well it would be tough to prove if I have to. I  thought I just it had to be 50% or more between my intermediate family ie. my fiancé and not his parents even though they own the house and what not. Welp, hope I don't get reviewed. I have filed HOH for the last few years with no problems but I hear the IRS is starting to review more and more people these days.

[Opus 17]

You don't want to try and create financial records 2 years from now when audited (if you are that unlucky) -- the IRS does not assign much weight to backdated records constructed from possibly faulty memories.

However, *contemporaneous" records can be very useful.  This might be a record from Quicken showing your expenses, or you might keep a diary or journal that you update once a week or once a month with the relevant information about finances, family events, and so on.  A written description of your living arrangements.

Being family, it may be a bit more difficult to prove you were two separate households, than if you were renting from a stranger or a more distant cousin, but it all depends on the facts of your specific situation.

And of course, only one of you (you or fiancee) can claim HOH, the other would file as single.  And the one who claims HOH must also claim at least one of your children as a dependent.

[AmandaR1]

Most people don't. I don't believe that's actually true (about the IRS statistically). If your future family in-laws claimed one of your children, that's when you'll get reviewed. I wouldn't presume you don't qualify without doing the numbers, but it is a tedious task going backwards, although do-able! The first step is dividing out your portion of the home by square feet. This worksheet is for determining dependent support, but it might be useful, in conjunction with the worksheet above: <a rel="nofollow" target="_blank" href="https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf...>

[Opus 17]

You have to pay more than half your household expenses.  So the first step is determining what your "household" is and if your household is separate from your in-law's household.  

The second step is adding up your household expenses (rent you pay, utilities and phone if you reimburse them, food you buy).  Note that "household" expenses don't include travel, clothing or medical expenses, those are personal, not household.  See page 8 here <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p501.pdf">https://www.irs.gov/pub/irs-pdf/p501.pdf</a>

Then the third step is to consider whether you pay more than half of your household expenses, taking into account anyone else who also pays part of your household expenses (which might include your fiancee, SNAP benefits, section 8 housing, and so on).  Money that your fiancee spends on things that are not household expenses (like child support to a past relationship, tuition, loans and other personal expenses) don't count as household expenses so it is possible for the lower wage earner to be HOH depending on how the higher wage earned spends their money. Again, see page 8 of publication 501.

[caron1981]

Sounds like I'll be ok.  My kids are 3 and 5. I have claimed HOH with them since they have been born with no problems yes we have been engaged that long. We are in no rush to be married. Both have been there done that before. Anways. Guess I'm just worried and needing better understanding incase something does happen.  I'm getting my usual amount and that goes straight to paying off the remainder of our credit cards and we are buying a house in 3 months so I hope my taxes are straight forward as it was last year. I got my refund 7 days after the IRS 15th release date hope this year is the same.

[Opus 17]

It should only get sticky if your in-laws try and claim your children as dependents.  If they do this without asking, the IRS will have to get involved and will look at the whole situation.  Otherwise, less than 1% of returns are audited.  (And they can't legally claim your children without your permission, plus a bunch of other factors.)

[caron1981]

Ok, Thanks for yalls help.  Like I said, I just get worried and like to have my bases covered if anything should come up. I hate being unprepared if problems do arise and I want no trouble from the IRS.  I just read a lot of people having their return reviewed for the HOH and Dependents out of now where but there's no telling what they did wrong on their return that got them flagged.