So, you've filed your taxes with TurboTax, confidently claiming Head of Household (HoH) status, and then... ping! An audit letter from the IRS lands in your mailbox. Don't panic! While an audit can be daunting, especially when it comes to a specific filing status like HoH, it's a process you can navigate successfully with the right preparation and understanding.
This comprehensive guide will walk you through exactly how to prove Head of Household if audited by the IRS after filing with TurboTax. We'll cover everything from understanding the requirements to gathering your documents and responding to the IRS.
The IRS and Your Head of Household Claim: Why the Scrutiny?
The Head of Household filing status offers significant tax benefits, including a higher standard deduction and more favorable tax rates compared to filing as Single or Married Filing Separately. Because of these advantages, the IRS often scrutinizes HoH claims more closely to ensure taxpayers genuinely meet the eligibility criteria. TurboTax, while excellent for guiding you through the filing process, simply helps you report the information you provide. It's your responsibility to ensure the accuracy and maintain the documentation to back up your claims.
So, if you're reading this, you've likely received a CP2000 notice (indicating a mismatch in income/deductions) or a Letter 566 (initial contact for an audit), specifically asking about your Head of Household status. Let's get you prepared!
Step 1: Don't Panic, Get Organized!
Alright, deep breaths! The first and most crucial step when facing an IRS audit is not to panic. An audit doesn't automatically mean you've done anything wrong; it just means the IRS wants to verify the information on your return.
What's the first thing you should do? Locate the IRS letter immediately. Read it carefully and understand exactly what information they are requesting and the deadline for your response. Note the contact person's name and number, as well as the audit ID or reference number. This letter is your roadmap.
What was your original thought process when you selected Head of Household in TurboTax? Think back to why you chose this filing status. Did you meet the criteria at the time of filing? This internal review will help you anticipate what the IRS will be looking for.
Step 2: Understand the IRS Head of Household Requirements
Before you gather any documents, you need to have a crystal-clear understanding of what the IRS considers "Head of Household." This will guide your evidence collection. There are generally three core requirements:
Sub-heading 2.1: Unmarried or Considered Unmarried
You must be unmarried on the last day of the tax year (December 31st).
Alternatively, you can be "considered unmarried" if you meet all of the following conditions:
You file a separate return from your spouse.
You paid more than half the cost of keeping up your home for the tax year.
Your spouse did not live in your home during the last six months of the tax year (temporary absences like military deployment, job assignment, or incarceration typically don't count as living apart).
Your home was the main home for more than half the year for your qualifying child, stepchild, or eligible foster child, whom you can claim as a dependent (unless the noncustodial parent is allowed the exemption under a written decree or agreement).
Sub-heading 2.2: Paid More Than Half the Cost of Keeping Up a Home
This is where many audits focus. You need to prove you contributed more than 50% of the total household expenses. These expenses generally include:
Rent or Mortgage Interest: Keep meticulous records of these payments.
Real Estate Taxes: Property tax bills are key.
Homeowners Insurance: Proof of payments.
Utilities: Electricity, gas, water, sewer, trash collection, internet.
Repairs and Maintenance: Significant repairs that contribute to the upkeep of the home.
Groceries/Food Consumed in the Home: This is often overlooked but can be a substantial expense.
What generally NOT to include: Clothing, education, medical treatment, vacations, life insurance, restaurant expenses, mortgage principal, transportation, rental value of the home, or services provided by you or other household members.
Sub-heading 2.3: A Qualifying Person Lived with You
You must have a qualifying person living in your home for more than half the tax year.
Qualifying Child: This is most common. They must meet age, residency, support, and relationship tests. This includes your biological child, stepchild, foster child, sibling, stepsibling, half-sibling, or a descendant of any of these (e.g., grandchild). Generally, they must be under 19 (or under 24 if a full-time student), and live with you for more than half the year (temporary absences for school or medical treatment count).
Qualifying Relative: In some specific cases, a qualifying relative can allow you to claim HoH. This typically applies if you care for a dependent parent (who doesn't necessarily have to live with you if you maintain their home) or other qualifying relatives who live with you and meet dependency tests. The rules for qualifying relatives are more complex, so consult IRS Publication 501 if this applies to your situation.
Step 3: Gather Your Evidence - The Proof is in the Paperwork!
This is the most critical step. The IRS relies on documentation. The more organized and complete your records, the better your chances of a smooth audit.
Sub-heading 3.1: Proof of Unmarried Status (if applicable)
Divorced or Legally Separated: A copy of your entire divorce decree, separate maintenance decree, or separation agreement.
Married but Considered Unmarried:
Documents verifying your spouse did not live with you during the last six months of the year (e.g., separate lease agreements, utility bills in separate names at different addresses, a letter from a clergy member or social services).
Proof you filed a separate return (your tax return copy).
Sub-heading 3.2: Proof of Paying More Than Half the Cost of Keeping Up the Home
This is where you'll need to show the financial burden you carried. Create a detailed spreadsheet of all household expenses for the tax year in question and highlight your payments.
Housing Costs:
Renters: Rent receipts, canceled checks, bank statements showing rent payments.
Homeowners: Mortgage statements (showing interest paid), property tax bills, homeowner's insurance statements, receipts for major repairs and upkeep.
Utility Bills: Electricity, gas, water, sewer, internet, trash removal. Gather monthly statements for the entire year.
Grocery Receipts: This can be challenging. If you paid primarily with a debit or credit card, you can often get itemized statements from your bank or card company. Consider using a spreadsheet to track your grocery spending for the audited year.
Other Household Expenses: Receipts for cleaning supplies, basic household repairs, and other items directly related to maintaining the home.
Tip: If you paid cash for anything, try to obtain a signed receipt or a written statement from the payee acknowledging receipt of funds.
Sub-heading 3.3: Proof of Qualifying Person and Residency
You need to demonstrate that the qualifying person actually lived with you for more than half the year.
For Children (most common):
Birth Certificates: To establish the relationship.
School Records: Report cards, enrollment records showing your address as the child's address.
Medical Records: Doctor's bills, vaccination records with your address.
Daycare Records: Invoices or enrollment forms.
Letters from Third Parties: A letter on official letterhead from a school, medical provider, social service agency, or place of worship that states the names of you and the qualifying person, your common address, and the dates they resided with you. This is often very persuasive.
Government Records: Any official documents like state ID or social services records that list your address for the child.
For Qualifying Relatives (other than parents): Similar documentation to children proving residency and dependency.
For Dependent Parents (who don't live with you):
Records proving you paid more than half the cost of their home (e.g., rent, mortgage, utilities for their residence).
Proof of their dependency on you (e.g., statements showing you paid their medical bills or other significant expenses).
Step 4: Prepare Your Response to the IRS
Once you have all your documents, it's time to prepare your formal response.
Sub-heading 4.1: Review the IRS Letter Again
Double-check the specific forms and information the IRS requested. Ensure your response directly addresses each point.
Sub-heading 4.2: Organize Your Documentation
Make copies: Send photocopies only. Keep the originals for your records.
Neatness counts: Organize your documents logically, perhaps by category (e.g., "Proof of Residency - Child," "Household Expenses - Utilities").
Create a detailed list: Include a cover letter and a detailed index or table of contents outlining every document you are submitting. This shows you're organized and helps the auditor.
Use Form 886-H-HOH: The IRS provides Form 886-H-HOH, "Supporting Documents to Prove Head of Household Filing Status." While not always mandatory for an initial response, it can be a helpful guide to ensure you're including the right types of documents.
Sub-heading 4.3: Write a Clear and Concise Cover Letter
Your cover letter should:
Refer to the IRS audit letter and its reference number.
Clearly state that you are providing documentation to support your Head of Household filing status.
Briefly explain how you meet each of the HoH requirements, referencing the attached documentation.
Express your willingness to provide further information if needed.
Be polite and professional.
Sub-heading 4.4: Sending Your Response
Mail: Send your response via certified mail with return receipt requested. This provides proof that you sent it and that the IRS received it.
Fax: If the letter provides a fax number, you can fax the documents, but still consider sending a copy via certified mail as a backup. Keep the fax confirmation.
Online Account: If you have an IRS online account and the option to upload documents is available, follow those instructions.
Step 5: What Happens Next? (and What if TurboTax Offered Audit Defense?)
After you submit your documentation, the IRS will review it. This can take several weeks or even months.
Sub-heading 5.1: Possible Outcomes
Acceptance: The best outcome! The IRS agrees with your claim, and the audit is closed. You'll typically receive a letter confirming this.
Request for More Information: The IRS may need further clarification or additional documents. Respond promptly and thoroughly.
Proposed Changes: The IRS may propose changes to your tax return, denying your HoH status.
If you disagree: You have the right to appeal the decision. This might involve a conference with an IRS Appeals Officer. At this stage, it's highly advisable to consider professional representation.
If you agree: You'll need to pay any additional taxes, penalties, and interest.
Sub-heading 5.2: TurboTax Audit Defense
If you purchased TurboTax Audit Defense (often offered as an add-on), they may provide assistance.
What does it typically cover? TurboTax's Audit Defense services usually offer assistance from a tax professional (an Enrolled Agent or CPA) who can help you prepare your response, correspond with the IRS on your behalf, and even represent you during the audit process.
How to activate it? Refer to your TurboTax purchase records or account details to understand how to initiate their audit defense services. They will typically have a specific process for connecting you with a representative.
Is it guaranteed to win? No. Audit defense services help you navigate the process and present your case effectively, but they cannot guarantee a specific outcome, as the final decision rests with the IRS based on your eligibility and documentation.
Step 6: Consider Professional Representation
While you can handle an audit yourself, especially if it's a simple request for documentation, for more complex situations or if you feel overwhelmed, consider hiring a tax professional.
Enrolled Agents (EAs): Federally licensed tax practitioners who specialize in taxation and have unlimited practice rights before the IRS.
Certified Public Accountants (CPAs): Licensed accountants who can represent taxpayers before the IRS.
Tax Attorneys: Lawyers specializing in tax law, particularly useful for complex legal interpretations or if the audit escalates.
A professional can:
Interpret IRS notices and regulations.
Help you gather and organize your documentation.
Communicate with the IRS on your behalf.
Represent you in IRS meetings or appeals.
Reduce your stress and increase your chances of a favorable outcome.
10 Related FAQ Questions
How to determine if I qualify as Head of Household?
You qualify if you are unmarried (or considered unmarried) on the last day of the tax year, paid more than half the cost of keeping up a home for the year, and a qualifying person lived with you in that home for more than half the year (with an exception for dependent parents).
How to calculate "more than half the cost of keeping up a home"?
Add up all qualifying household expenses for the entire year (rent/mortgage interest, property taxes, utilities, insurance, repairs, groceries). If your contribution to this total is more than 50%, you meet this requirement.
How to prove a child lived with me for more than half the year?
Provide documents like school records, medical records, daycare records, or letters from school/medical/social service providers or places of worship that list the child's residence at your address.
How to handle an IRS audit notice for Head of Household?
Do not ignore it. Read the letter carefully, understand what's requested, gather all supporting documentation, and respond by the specified deadline via certified mail with return receipt.
How to find IRS Form 886-H-HOH?
You can download Form 886-H-HOH directly from the official IRS website (IRS.gov). It's a useful guide for the types of documents they look for.
How to appeal an IRS decision if my Head of Household status is denied?
If the IRS proposes changes you disagree with, your audit letter will outline your appeal rights. You can request a conference with an IRS Appeals Officer. Consider seeking professional tax representation at this stage.
How to get help if I can't gather all the required documents?
Do your best to gather what you have. If certain documents are truly unavailable, explain why in your response. The IRS might be more understanding if you provide a clear explanation and as much other supporting evidence as possible.
How to avoid a Head of Household audit in the future?
Ensure you genuinely meet all criteria, keep meticulous records throughout the year for all household expenses and residency, and double-check all information before filing your tax return.
How to use TurboTax's Audit Defense feature if I purchased it?
Refer to your TurboTax account or purchase confirmation for details on how to activate and utilize their audit defense services. They typically connect you with a tax professional who can assist you.
How to find a qualified tax professional for audit representation?
Look for Enrolled Agents (EAs), Certified Public Accountants (CPAs), or tax attorneys. You can search for EAs on the IRS website and CPAs through state board of accountancy websites. Seek referrals and check credentials.
