IN July of each year, the Franchise Tax Board of the State of California mails Questionnaire Form 4803 to taxpayers who claimed Head of Household status the previous year. Do not ignore this questionnaire. Mail it back within 20 days; otherwise, it becomes final. You’d have to go to appeals to fight it. If filled out properly, you can keep that Head of Household status. If filled out erroneously, you will owe additional taxes from being bumped up to the higher rate of either single or married filing separate returns. It is therefore important to discuss how the system works with the head of household issue.
Head of Household (HOH) questionnaires are mailed to:
1. First time HOH filers.
2. Taxpayers who were denied HOH filing status in the previous year.
3. All other HOH filers every third year.
You qualify as Head of Household if all of the following conditions are met for the year:
1. You must be an unmarried person. An unmarried person includes one who has never been married, a widow or widower whose spouse died in a prior year, one who has obtained a final decree of divorce or separate maintenance. Remember that an interlocutory decree of divorce does not result in unmarried status.
2. You must maintain a home for more that one-half of the taxable year in which lives a person who qualifies under the following relationships:
A. Sons, daughters, and their dependents (step children are OK).
B. Any other relatives including parents (but not cousins).
3. You must contribute over half of the cost of maintaining the home.
There is a special rule for certain married persons who may be treated as unmarried for the purpose of determining the filing status. This applies if you lived apart from your spouse for the last six months of the year and maintained a home for a dependent child. BEWARE: You cannot avail of this status if you maintained your home for a dependent other than your child.
When you receive this HOH questionnaire, do not be alarmed into thinking that you are being targeted for disallowance of HOH status. This is a cyclical occurrence. The computers of the State have been programmed to send out these questionnaires.
Tip: Photocopy the form, fill out the photocopy, sign the original and mail both to your tax preparer who can check it before it is mailed. Remember that one lousy error can result in unwanted tax bills from both the FTB and the IRS (These agencies share data. the Sate FTB send your bill to the Federal IRS).
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Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 35th anniversary this year. You may email tax questions to Vic at [email protected]. You are welcome to visit our website for more than 300 tax tips at www.victorsycpa.com.