The head of household filing status is often seen as a tax break for single mothers, but its design actually benefits high earners more than those who need it most. Created in 1951 to ease the tax burden on unmarried taxpayers supporting dependents, the status is claimed by roughly 21 million tax returns, with about 79% of filers being women.

Disproportionate Benefits

However, researchers found that in 2011, a taxpayer at the 25th percentile of the income distribution filing as head of household saved about $23 a year, while a taxpayer at the 75th percentile saved $1,573, a 68-fold gap. This is because the benefit accrues only after a filer’s income has climbed above certain thresholds, which low earners have not crossed.

The Tax Policy Center estimates that only about 8% of the lowest-income families with children benefit from the status at all, since many owe no federal income tax to offset in the first place. Furthermore, the benefit does not scale with the number of dependents a filer supports, unlike the Child Tax Credit or the Earned Income Tax Credit.

Racial and Gender Disparities

Black women are disproportionately affected by this design flaw, making up 21.6% of all head of household filers in the country. Black filers claiming the status are 84.5% female, and they are more likely to be penalized by the benefit structure, which pays the most to the highest earners.

A possible solution is to replace the head of household status with a flat per-child credit, which would produce net gains for roughly the bottom 4 income deciles. This redesigned benefit should grow with the number of children a parent raises and reach families whose earnings are too low to owe much income tax.

Original reporting: The Washington Informer — read the source article.