Ask the tax adviser
Child support and head-of-household
Dear Tax Talk:
When filing as head of household, is child support considered for
figuring out whether you pay more than 50 percent of household expenses?
In other words, if my ex-husband pays me $1,200 a month in child
support, do I deduct that amount from my monthly household expenses?
Frankly, your question on the surface looks simple, but I can see
where the answer is not so clear. I found nothing in my research
that indicates you need to deduct the amount of child support paid
to you from the cost of your household expenses.
In addition to meeting certain other tests to qualify
for head-of-household status, you need to provide more than half
of the cost of keeping up the household.
Revenue Service Publication 501 provides a worksheet on page
seven to determine if you paid half the cost of the household's
upkeep. In completing the worksheet, it asks you to complete the
amounts that you paid and compare that to amounts that you provided
for these expenses.
In my opinion, if you earn money from sources other
than child support you would count this towards the household expense
test. For example, in completing the worksheet, if your total household
expenses were $10,000 and you have income from sources other than
child support of at least $5,001, then you would be considered as
providing more than half of the costs of maintaining the home, which
qualifies you to file as head of household.
Tax advantages of buying vs. renting
Dear Tax Talk:
What advantages are there in buying vs. renting if all your income
is tax free?
From a tax standpoint, if all your income is tax-free there is no
difference whether you buy or rent. The only tax advantage to owning
a home is that the interest on the mortgage is tax deductible. But
if you don't have any taxable income, then the deduction is meaningless,
as you have no tax savings.
By the same token, if you only rent, you won't accumulate
wealth through homeownership.
-- Posted: Aug. 28, 2001