Whether two adults living together can be two separate households, or one household, is a bit tricky, and depends on the facts and circumstances. Consider two examples:
A. Mary is a single mother with one child. She allows her friend Jane, also a single mother with a child, to live in one bedroom of Mary's 3 bedroom home. Jane pays a fixed rent. Mary and Jane keep separate food in the kitchen, their kids attend separate schools, and the two families don't do combined activities like weekend trips or vacations. Mary and Jane probably have two separate "households" and can both be HOH on their tax return, even though they live together.
B. Mary is a single mother with one child. She allows her sister Jane, also a single mother with a child, to live in one bedroom of Mary's 3 bedroom home. Mary and Jane share expenses. The kids (cousins) attend the same school and the two families plan activities together, like going to the zoo, eating dinner out, and taking day trips and vacations together. Maybe the kids share a bedroom so Jane can have a separate bedroom. The two families form one household, and only Mary or Jane (the one who pays more than half the total expenses) can be HOH.
You need to look at your overall circumstances to see whether you have one combined household or two separate households. If you both claim HOH at the same address, you should be prepared to provide a written explanation to the IRS that details your living arrangement and how you determined that you constitute separate households.
