The Internal Revenue Service has several different tax filing statuses than may cost you thousands if you do not choose the right one. Filing as a head of household generally provides the best benefits and least amount of tax obligations for individuals.

Identification

Filing as a head of household means you are unmarried and must provide half of the support for an individual for the majority of the tax year and half of the cost of maintaining a home, according to the Internal Revenue Service.

Exception

You can have a legal marriage and still file as head of household if you are separated for more than half of the year, called "considered unmarried" or "abandoned spouse," reports Smart Money. In addition, parents claimed as dependents do not need to live in the same place as the head of household.

Benefits

Filing as a head of household usually reduces the tax rate on your income and contains a greater standard deduction than a filing status of single or married but separated, reports the IRS.

Features

The IRS offers a head of household worksheet in Publication 501 to determine if you qualify for the housing cost requirement. Food, interest on home loans, property tax and maintenance are included in housing costs.

Warning

When calculating housing costs, do not factor in personal expenses such as clothing, medication, cars and vacation, reports the IRS. Also, check the IRS schedule to make sure you can claim someone as a dependent.

Source:

Internal Revenue Service; Publication 501; Head of Household

SmartMoney.com; What's Your Filing Status?