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Head of household audit letters: jumping through the hoops

If you received a Head of Household (HOH) audit letter from the California Franchise Tax Board (FTB), you have some hoops to jump through. If you get such a letter and don't take action to verify your HOH status, it could cost you a lot of money on your taxes. It could also put you at risk for a tax penalty for understating your income.

In this post, we will explain what HOH filing status is and how you can respond to a HOH audit letter.

In California, HOH filing status allows for a larger standard deduction than single filing status. It also tends to keep those who use it in a lower tax bracket. More than two million California taxpayers use it every year.

HOH status is used in several different contexts. One is if you are unmarried (or considered unmarried for tax purposes) and maintain a home for a relative who lives with you for a certain amount of time in the year. The amount of time needed to qualify for this is more than half the year.

HOH is also available to you under certain circumstances if you are in a registered domestic partnership (RDP). But to qualify, you must show that you are involved in a formal process to end the RCDP relationship. And you must also meet some other requirements to show that you should be considered to not be in an RDP for tax purposes.

The rules for qualifying for HOH status are rather complicated. There are half a dozen factors that must all apply. For example, you must have paid more than half of the cost of keeping your home during the tax year in question.

You can respond to a HOH audit letter by going online or by using the envelope that is included. Think of it as a hoop that's worth jumping through because of the tax benefits.

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