The head of household filing status is just that -- a filing status to claim on your tax return. If you need to file, you'll use the filing status you're eligible for even if you didn't have federal income tax withheld during the year. You can file as head of household if you're unmarried and have at least one qualifying dependent to claim.
The Internal Revenue Service considers you unmarried if you've never been married or were divorced by the last day of the tax year. If you’re technically married, but didn't live with your spouse for the last six months of the year, you also qualify to be unmarried for tax purposes.
A qualifying dependent can be a child under age 19, or a full-time student under 24. An adult relative can also be your dependent, but only if that person's taxable income is below a certain level. As of publication, the limit was $3,700. You'll also need to meet other IRS standards to claim your dependent, including support, relationship and residency tests. Some folks try to claim an unemployed spouse as a dependent and file as head of household. This is not a good idea because it's against the IRS rules. For more details on limits and dependent tests, take a peek at IRS Publication 501.
Refundable tax credits are the best type of tax credit to have. They increase your refund dollar-for-dollar, and even if you aren’t required to file a return, they can still get you a refund. Your federal tax withholding is one type of refundable credit, but you could have more with dependents. These include the earned income credit and the additional child tax credit. Claiming these two credits can increase your refund by as much as several thousand dollars.
Choosing the Standard Deduction
The standard deduction for head of household is higher than the standard deduction for single taxpayers. However, a head of household can skip the standard deduction to itemize, which is more attractive if you have dependents. Mortgage interest, charitable donations and medical expenses all count for you and any dependents. If all of your itemized deductions equal more than the standard deduction, it could be worth your time to fill out Schedule A.