CASE STUDY #4: Unmarried Couple, Each with Minor Child
Al and Janice, both U.S. Citizens, have lived together for the entire year but are not married to each other. They each have a minor child by a previous relationship: Bob is Al’s son and Susan is Janice’s daughter. Both of the children have lived with Al and Janice the entire year. Both Al and Janice are employed and share the household expenses.
Dependency Bob – Since Bob meets the age, residency and relationship tests with Al, he is a qualifying child of Al’s and thus a dependent of Al.
Dependency Susan – Since Susan meets the age, residency and relationship tests with Janice, she is a qualifying child and thus a dependent of Janice.
Filing Status Al & Janice – Since Al and Janice are not married, they cannot file a joint return. Both Al and Janice have a qualified person (their respective children) for purposes of filing as head of household. However, there are two issues that come into play regarding HH:
-
The HH rules specify that a taxpayer must pay over half the costs of maintaining as his or her home a household which is the principal place of abode for more than one-half the year for a qualified person. With Al and Janice sharing the household expenses, the issue is who paid over half of the costs?,
-
The IRS also contends that there can only be one HH in a single home, unless there is a certain amount of divisibility of quarters. (TC Memo 1974-137)
Thus, either Al or Janice will file HH and the other will file as single.
Other Issues: Each, if they otherwise meet the requirements would qualify for child tax credit, EITC and childcare credit. They would each be a separate tax family for purposes of the ACA.