Me and the mother my two kids live together we are not married I filed head of household and claimed the two kids and her as dependents. She has no income and watches the kids full time does she need

[gr33nl1t3]

Does she need to file and if so what should we do she look out for?

[xmasbaby0]

No.  If your GF had no income then she has no reason to file a tax return.

[gr33nl1t3]

She is not my GF(assuming "Girlfriend") but the mother to my two kids.  She lives with me as the best solution to child care.  She cooks as well as cleans and does laundry.  She has her living space in my house and is receiving services from the state.  For this I provide for any needs she has beyond that.

  She now has received PUA in CA as having been receiving state services is was stated by not having worked her is eligible by not qualifying for regular unemployment claim.

[xmasbaby0]

You claimed your children's mother as a dependent which makes her ineligible to receive any stimulus payments ---dependents cannot receive stimulus payments.   In your original question you said she had no  income but now you say she received unemployment.    She may need to file a tax return to report the unemployment , but we do not know how much she received---you did not tell us.   If she files a tax return she must say on her own tax return that she can be claimed as someone else's dependent.

Who has to file?

http://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F

However----if she had over $4300 of income (including the unemployment) in 2020 then it was a mistake for you to claim her as a dependent and you need to amend your return to remove her as your dependent.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent 

[Hal_Al]

If she is receiving services from the state, as well as getting PUA, there's some question as to whether you actually provide more than half her support (an additional requirement for her to be a dependent*). 

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf The support value of the  home, you provided,  is the fair market rental value, divided by the number of occupants.

*There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related).  She cannot be your QC, since she is not related to you. A person can still be a Qualifying relative dependent, if not a Qualifying Child, if he meets the 6 tests for claiming a dependent:

1. Closely Related OR live with the taxpayer ALL year
2. His/her gross taxable income for the year must be less than $4300 (2020).
3. The taxpayer must have provided more than 1/2 her support
4. She must be a US citizen or resident of the US, Canada or Mexico
5. She must not file a joint return with his spouse or be claiming a dependent of her own
6. She must not be the qualifying child of another taxpayer

[Opus 17]

@gr33nl1t3 

The fact that you were not in a romantic relationship with this person does not change the tax situation. This person could be your dependent if they live as a member of your household for the entire year, and they had less than $4300 of taxable income, and you provided more than half their financial support.

Unemployment compensation is certainly taxable income. Other forms of government assistance may not be taxable income, but they do count as support not provided by you.  If her taxable income for any tax year is more than $4300, she can’t be your dependent in that year. If her taxable income is less than $4300, you may need to do a calculation of all of her support provided by yourself, provided by her, provided by others, and compare it with her total living expenses. The IRS has a worksheet to help with this.

If you claim her as a dependent, you do not have to send proof to the IRS at that time. But, keep proof of your financial situation for at least three years in case she or you are audited.  If she is required to file a tax return because her unemployment or other income is more than $4300, you can’t claim her as a dependent and if you do, it will eventually be corrected by the IRS and they will send you a bill for any tax refund that you must pay back after the correction.

If you pay more than half the household expenses, and you claim at least one of your biological children as a dependent, then you will still qualify to file as head of household, even if you don’t pay more than half of the other parents’ individual expenses.