Qualify for HOH

[HV Ken]

Our bus driver client is getting advice from all the other bus drivers in the garage about her eligibility to file Head of Household status. Are we missing something here?

Single woman. 28 year old son lives in her home with her. He had $4,100 income on W-2.

Head of Household requires:

1) unmarried = YES

2) > 50% cost = YES

3) "qualifying person" = ??

Look up "qualifying person" in Pub 501. See Table 4.

Two options:

1) Qualifying child

2) Qualifying relative

We pass the Dependent taxpayer, Joint return, and Citizen tests.

For Qualifying child, go to Exemptions for Dependents. Next there are 5 tests:

1) Relationship = YES

2) Age = NO > 24yo

3) Residency = YES

4) Support = YES

5) Joint = YES

Since he is over 24yo, he fails the Age test and cannot be a Qualifying Child.

OK, then on to the Qualifying Relative (from Table 5).

1) Not a Qualifying Child = YES

2) Relationship = YES

3) Gross income = NO > $3,650

4) Support = YES

Since he made more than $3,650, he fails the Income test and cannot be a Qualifying Relative.

At this point, it would seem that the son does not qualify his mother for HOH status. Have we concluded correctly, or are we missing something? The other bus drivers are telling our client they went to H&R Block and Block filed them for HOH in similar circumstances.

Thanks!

[HV Ken]

The Pub has the answer right on page 8!

Example 2 — child who is not qualifying person.

The facts are the same as in Example 1 except your son was 25 years old at the end of year and his gross income was $5,000. Because he does not meet the age test (explained later under Qualifying Child), your son is not your qualifying child. Because he does not meet the gross income test (explained later under Qualifying Relative), he is not your qualifying relative. As a result, he is not your qualifying person for head of household purposes.

[Gail in Virginia]

Good job, Ken! Glad you were able to help Ken out. Once upon a time, this child would have qualified her for HOH, but that was before the Qualifying Child and Qualifying Relative rules were established several years ago. Could the other bus drivers have been in similar circumstances 10 years ago?

[jainen]

>> Block filed them for HOH in similar circumstances.<<

Have you all noticed how many folks have "similar circumstances." Grown-up kids who work a little to pay for their weed, and accidentally trigger a W-2 along the way. Too bad--the only tax benefit is the parents can deduct medical bills.

I've got one in my own garage.

[HV Ken]

Once upon a time, this child would have qualified her for HOH, but that was before the Qualifying Child and Qualifying Relative rules were established several years ago. Could the other bus drivers have been in similar circumstances 10 years ago?

Nope. There is, apparantly, a whole garage filled with bus drivers filing this way right now for tax year 2010.

Can anyone say Form 3949-A ?

[HV Ken]

The other bus drivers are telling our client they went to H&R Block and Block filed them for HOH in similar circumstances.

Other things she is telling us Block is deducting for the other bus drivers is all their daily mileage. For example, driver heads to the lot to get their bus. They have a break during the day before the afternoon runs. They are deducting all their personal mileage the drivers are driving in their own vehicles during the break as unreimbursed job expenses. They are also taking $80/week for driving to work, $750/year allowance for soiled street clothes since they get dirty by the diesel fumes, etc.

I am ready to say come get your papers and take them to Block then.

[jasdlm]

I had a client get audited this summer. Return was prepared by our favorite big box. He is an executive recruiter, and Block told them they could deduct a $200/mo uniform allowance on his 2106. They also created a Schedule C for him and deducted the health insurance premiums that he already paid pre-tax through his employer. Also deducted the cost of his land line at his home and a myriad of other 'expenses'. Listed a computer and a desk as expenses and all numbers were round numbers. Many of the expenses we could not even identify, and the 'preparer' could give us no information and had no backup or workpapers file. I realize that the taxpayer is responsible for reviewing the return, so certainly my clients were at fault, but geez.

Auditor was incredibly kind. We decided to just go in and lay the cards on the table. Client ended up owing several thousand dollars in tax. However, the auditor waived the accuracy related penalty. Also, IRS had indicated they were going to look at the following year, also. The auditor said that she would be willing to simply adjust the following year's return by the same percentage she adjusted the audited year's return. This was really good for my client, since the next year's deductions were even higher and equally unsubstantiated.

Sheesh.

[kcjenkins]

Two things come to mind. One is that people often claim 'my preparer deducted ____] when in fact the preparer did not actually deduct it, just did not make an issue of it. I've done that a time or two myself.

Second, while the situation may seem the same, the other person's kid might have made less than $3650. And thus be a qualifying relative.

Either way, showing them the example in the Pub will usually shut them up. If not, better to give them their papers and show them the door. Because you know when the excrement hits the oscillating blades, they are going to blame you.