Head of Household filing status: Another perk at tax time for same-sex parents with children
Last week, Helen wrote about why there are many good reasons for gays and lesbians to fight for the right to marry ‘“ but tax time is probably not one of them. She explains that if you and your partner have two solid incomes, then you’ll end up paying more for the privilege.
As a new parent, I’ve learned there’s another perk with being recognized as a single person in my filing status. It’s called Head of Household. Let me explain’¦
Head of Household is a filing status for individual American taxpayers. According to Wikipedia:
Generally, to qualify for head of household status you must be unmarried, not entitled to file as a qualifying widow or widower, and have a dependent child. You must also have provided more than half the cost of maintaining, as your home, a household that was the main home for a qualifying dependent.
Advantages to qualifying as a Head of Household: Someone who qualifies as a head of household uses the tax table in §1(b) of the IRS code. This table contains a wider tax bracket than unmarried individuals. A head of household also can deduct a larger personal exemption.
All this means a few thousand in savings! For example, the standard deduction is $5,450 for singles but it increases to $8,000 if I take the head of household status.
With Sam being born in December, he arrived just in time to be a qualifying dependent on my 2008 tax return. That said, because he was adopted it has required jumping through a few hoops to make sure I had the proper paperwork to legally claim him.
First, you need to get your child a social security number. In order to apply, I have to be listed on his birth certificate. I’m not (or will not be listed) until the adoption is finalized by the state later this year’¦ this means, for 2008 tax purposes, I could not claim him as a dependent in 2008.
Jeanine thought there had to be some way around this and after doing some research, she learned that the IRS is able to assign a temporary Adoption Taxpayer Identification Number (ATIN) for Sam:
The ATIN is not a social security numbers (SSN). You can use this temporary number on your individual tax return to claim you adoptive child as your dependent and the claim the child and dependent care credit. When the adoption becomes final, you must obtain an SSN for your adoptive child.
The form to apply is W-7A: Application for Taxpayer Identification Number for Pending U.S. Adoptions. We filled it out and voila, our efficient Federal government (ala the IRS) had the number back to us in less than 30 days.
And when my return is finally filed and my refund arrives, it will be a bit bigger than I originally planned. And we all know how much I like getting a refund each year. Thanks to Uncle Sam for some personal economic stimulus. Thanks to Sam for dubbing me Head of Household!
Photo credit: stock.xchng.
I totally agree with you that tax time is one time that our lack of a right to marry really pays off for same-sex couples. Of course, I’d rather have my partner get on my insurance and get my social security benefits and get to visit me in hospital but at least there is some little pay-off.
First, I was not aware that it was possible to claim a dependent before you’ve adopted him/her. My daughter was born in very late Dec, 2007 so I didn’t adopt her or claim her until 2008. She now has an SSN of course so I’m not even sure that she’d need an ATIN. Interesting.
Second, another possibility for same-sex couples with children is if one is the “breadwinner” and the other does not work outside the home. The breadwinner can claim the dependents but the non-earner (assuming s/he has a little income) can claim the dependents for EIC purposes only.
Debra: We didn’t think we could claim him either until after the adoption was finalized (which in California can take 6-9 months putting us into 2009), but he became our dependent day 1 (in Dec 2008) which is why the IRS will assign him the temporary ATIN for filing purposes. We thought because we couldn’t get him an SSN until later that we were out of luck, but nice that it worked out this way for us… as you say, “at least there is some little pay-off.”
Debra, don’t forget that you can fill out a 1040X if you made a mistake filing in 2008! That money is yours, plus interest, and the IRS will gladly pay you back.
Clint/Nina – Yes I can definitely ammend my tax return. My concern is that because I couldn’t claim the dependent, my partner did in 2007. Now it’s worth more to me than to her (she’s a SAHM). Still, wouldn’t we have to append her return first (and pay the $1300+ due) before we could append mine?