The number of births to unmarried women has been falling, however, it’s now become more likely that those unmarried women aren’t truly single – they’re in a cohabiting relationship. In fact, for the first time, cohabiting births exceed single-parent births.
Besides being a fun statistic to throw out at dinner, this arrangement actually causes some tricky tax complexity for these couples. Married couples can claim their children and related tax benefits by filing jointly. Cohabiting couples can’t. Even if cohabiting couples share expenses and the responsibility for their child, they will still have to decide which one will claim the child.
Rather than both parents using the single filing status, which will limit certain tax benefits, one of the parents will likely qualify to file as head of household. Filing as head of household will increase that parent’s standard deduction from $6,100 (for single filers) to $8,950 and will usually lower their tax rate. In this situation, a taxpayer must pay more than half the cost of household expenses and maintenance for the year to qualify to use the head of household filing status.
We look at this kind of scenario, as well as a couple others, in the infographic below. And – one more reminder! – each tax situation is unique. With complicated issues like this, it’s best to consult with a tax professional on your specific case.
