Head of Household confusion

[Bacres]

I have a 32 year old daughter and her 2 under aged children who live with me *(3+ years).  She earns about $5k per year, and I pay 100% of household expenses, can I claim HOH status for her, even if she files a return?   I don’t want to disqualify her for the child tax credit. Is she restricted to an income threshold that disqualifies me from claiming HOH status for her? 

[DoninGA]

Since her gross income is $4,400 or more in 2022 you cannot claim her as a dependent under the Qualifying Relative rules.

To be a Qualifying Relative -

1. The person cannot be your qualifying child or the qualifying child of any other taxpayer. A child is not the qualifying child of any other taxpayer if the child's parent (or any other person for whom the child is defined as a qualifying child) is not required to file an income tax return or files an income tax return only to get a refund on income tax withheld.
2. The person either (a) must be related to you or (b) must live with you all year as a member of your household.
3. The person's gross income for the year must be less than $4,400 (social security does not count) in 2022
4. You must provide more than half of the person's total support for the year.
5. The person must be a U.S. citizen or a U.S., Canada, or Mexico resident for some part of the year.
6. The person must not file a joint return with their spouse.

[Bacres]

If she earns less than $4400, then I can claim HOH status.  Does this disqualify her from filing and claiming herself as a dependent and does this disqualify her for the child tax credit?  

[DoninGA · Accepted solution]

If you are able to claim her as a dependent you may be eligible for Head of Household filling status.

She can still file a tax return but cannot claim any of her children as dependents and would not be eligible for the child tax credit.  She must indicate on her tax return that she can be claimed as a dependent.

A dependent cannot claim someone as a dependent on their tax return.

See this TurboTax support FAQ for Head of Household - https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-filing-status/qualify-head-household...

[Hal_Al · Accepted solution]

You cannot claim your daughetr as a dependent, if she makes more than $4400. Since, you cannot claim her as a dependent, she cannot be a qualifying person for you to claim Head of Household (HoH) on your tax return.

A better question is: can you claim one or both of her children as a dependent (and hence a qualifying person for HoH).  

A child can be the “qualifying child” dependent of any close relative in the household. It is optional (in your case) whether you or your daughet claim her children. You can even each claim one.   See full  rules below.  You should do test returns to see which way the family comes out best.  

There were one time generous child tax credit rules for 2021, so your daughter could get extra money in 2021.  For 2022, the old rules are back and you are more likely to get more than her for claiming the children. 

(Child) Dependent Rules.  A child closely related to a taxpayer can be a “Qualifying Child (QC)” dependent, regardless of the child's income, if:

1. He (the child) is under age 19, or under 24 if a full time student for at least 5 months of the year, or  is totally & permanently disabled
2. He did not provide more than 1/2 his own support
3. He lived with the relative (including temporary absences) for more than half the year
4. He is younger than the relative (not applicable for a disabled child)
5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child (this essentially means that you have the parent’s permission to claim the child, if the child also lived with the parent more than half the year)
6. If the parents of a child can claim the child as a qualifying child but no parent so claims the child, no one else can claim the child as a qualifying child unless that person's adjusted gross income (AGI) is higher than the highest AGI of any of the child's parents who can claim the child.

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

[andy54x]

I filed as Head of Household last year using TurboTax. As of today (Jan. 3, 2023) TT is not allowing me to file as HoH but only as Single. There may be other reasons for this (I don't have any of my 1099s yet) but the reason seems to be that my Qualifying Person, my grandson who lives in my home abroad and whom I support, is not a U.S.citizen and has no SSN. That as a noncitizen outside of the USA, Canada or Mexico he cannot be my dependent is irrelevant: see IRS Pub. 501, Table 4: "a qualifying person, whether or not the child meets the Citizen or Resident Test.". 

[GeorgeM777]

The reason you may not be able to claim Head of Household status is because your grandson did not live with you for more than half the year.  You indicated in your post that your grandson lived in your home abroad.  The IRS requires that the qualifying child live in the same home as the person claiming Head of Household status.   

The requirement that the qualifying child live in the same home with you is contained within IRS Pub. 501.  IRS Pub 501 at page 8 states the following:

A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). 

There is an exception to the requirement that the qualifying person live with you if the qualifying person is a dependent parent.  However, when the qualifying person is a child, then the IRS requires that the child live in the same home as the taxpayer claiming Head of Household status.  

Here is a link to IRS Pub. 501.

Dependents, Standard Deduction and Filing Information

@andy54x