IRS Tax Rules for Unmarried Couples Living Together

The IRS tax rules for unmarried couples living together start from a single fact: cohabitation is not marriage. No matter how long you have shared a home, a mortgage, or a bank account, the IRS treats each of you as a separate single taxpayer, and your marital status on December 31 controls what you can do on your return.¹ That one rule reshapes filing status, dependent claims, home-related deductions, gifts between you, and what happens when one of you dies.

How You Have to File

You cannot file Married Filing Jointly or Married Filing Separately. Both require a legal marriage recognized under state law by the last day of the tax year.¹ Most cohabiting partners file as Single, which carries the smallest standard deduction and the tightest brackets.

Head of Household is the better status when you can get it. For 2026, Single filers get a $16,100 standard deduction; Head of Household filers get $24,150.² To qualify, you must be unmarried and pay more than half the cost of keeping up a home that was the main home of a qualifying dependent for more than half the year. Qualifying home costs include rent or mortgage interest, property taxes, homeowner’s insurance, utilities, repairs, and food eaten in the home. Clothing does not count.³

When both partners contribute to household expenses, only one can be paying more than half. At most one of you qualifies for Head of Household; the other files Single.⁴

The Common Law Marriage Exception

The IRS follows state law on whether you are married. If you entered a valid common law marriage in a state that recognizes them, you are married for federal tax purposes even if you later moved. The IRS confirmed this in Revenue Ruling 58-66 and reaffirmed it in Revenue Ruling 2013-17.⁵ Fewer than a dozen states still allow new common law marriages, and living together is not enough on its own in any of them. You generally need to intend to be married, hold yourselves out publicly as married, and cohabit. Absent that, the IRS treats you as single regardless of how long you have lived together.

Can You Claim Your Partner as a Dependent

A partner is never a “qualifying child.” The only route is Qualifying Relative, which has four tests:⁶

Gross income below $5,050 for the year (the most recently published threshold, adjusted for inflation).⁶
You provide more than half of their total support, including housing, food, clothing, medical care, and education.⁷
Your partner lives with you the entire year as a member of your household.
Your partner does not file a joint return with someone else.

Most claims break on the income test. Even a modest job pushes a partner past $5,050, and no amount of support you provide can rescue the claim. When your partner does qualify, you can take the $500 nonrefundable Credit for Other Dependents and, potentially, deduct medical expenses you paid on their behalf.⁸

Claiming Children in the Household

Your Own Child

A biological or legally adopted child is your Qualifying Child under the standard rules: lived with you more than half the year, under 19 (or under 24 if a full-time student, or any age if permanently and totally disabled), and did not provide more than half of their own support.⁶

Your Partner’s Child

Because you are not married to the child’s parent, your partner’s child from a previous relationship is not your stepchild and does not fit any Qualifying Child relationship category.⁹ You can only claim the child as a Qualifying Relative, meaning the same four-part test above applies: gross income below the threshold, more than half of support from you, full-year household member, and no joint return.

When Both Parents Live in the Same Home

If both unmarried parents live with the same child and each could claim them, the IRS tiebreaker gives the child to the parent they lived with longer during the year. If time was equal, the parent with the higher adjusted gross income wins. A non-parent in the household can only claim the child if their AGI is higher than every eligible parent’s AGI.⁹

Credits Travel Together

You cannot split a child’s tax benefits between two unmarried parents. Whoever claims the child as a qualifying child gets the whole set: the Child Tax Credit, Head of Household filing status, the Earned Income Tax Credit, and the child and dependent care credit. The other parent can access those benefits only through a different qualifying child.¹⁰

With two or more children, each parent can claim one and take the corresponding credits and Head of Household status. That is often the most tax-efficient split, because both parents then get the wider brackets. Run the return both ways before filing. For 2026, the Child Tax Credit is $2,200 per qualifying child, with up to $1,700 refundable, and the EITC can add several thousand more for lower-income filers with kids.

Splitting Home-Related Deductions

Mortgage Interest

Only a person who is legally liable on the mortgage and who actually paid the interest can deduct it. If just one partner signed, only that partner deducts, no matter who wrote the check. When both are co-borrowers, each deducts the interest they personally paid, the combined total cannot exceed the amount on Form 1098, and the partner who didn’t receive the 1098 attaches a statement showing how the interest was split.¹¹ The interest deduction covers the first $750,000 of acquisition debt ($375,000 if Married Filing Separately, which doesn’t apply here).

Property Taxes and the SALT Cap

Property taxes follow legal ownership. If only one partner is on the deed, only that partner deducts. If both names are on the deed, each deducts what they paid. Unmarried co-owners have a structural edge on the state and local tax cap: each files a separate return with a separate cap, while a married couple filing jointly shares a single cap. The original $10,000 cap under the Tax Cuts and Jobs Act was raised by the One, Big, Beautiful Bill signed in mid-2025, so check current IRS guidance for the figure that applies to your filing status.

Medical Expenses

You can deduct unreimbursed medical expenses for yourself and your dependents to the extent they exceed 7.5% of your adjusted gross income.¹² Bills you pay for your partner are deductible only if your partner qualifies as your Qualifying Relative dependent. If they don’t, those expenses are not deductible on your return no matter who paid.

Employer Health Coverage and Imputed Income

Many employers extend health coverage to domestic partners, but the tax treatment differs from a spouse. If your employer pays part of the premium for your unmarried partner and that partner is not your tax dependent, the employer’s contribution is added to your taxable wages as imputed income on your W-2, and you owe federal income tax and FICA on it. The amount is the difference between what the employer pays for the coverage tier that includes your partner and what it would pay for employee-only coverage. Depending on the plan, that can add $2,000 to $6,000 or more to your taxable income each year. If your partner does qualify as your Qualifying Relative, the employer-paid premium is excluded from your income just like spousal coverage. That $5,050 gross income test starts to look more valuable in that light.

Gifts and Large Transfers Between Partners

Married spouses can transfer unlimited amounts to each other tax-free under the marital deduction. Unmarried partners cannot. Any transfer of money or property that exceeds the annual gift tax exclusion is a taxable gift. For 2026, the annual exclusion is $19,000 per recipient.¹³

Cross that number in a calendar year and you must file Form 709 to report the gift.¹⁴ Filing doesn’t necessarily mean owing. Each person has a $15,000,000 lifetime gift and estate tax exclusion for 2026, and gifts above the annual amount simply chip away at that lifetime figure.¹³ The paperwork obligation is what catches people out, especially when one partner pays the other’s share of the mortgage or gets added to a deed on a home worth several hundred thousand dollars.

Loans between partners have their own trap. A significant loan needs to carry at least the Applicable Federal Rate. Below-market interest can be recharacterized so that the forgone interest is treated as a gift from lender to borrower. Exceptions exist for loans under $10,000 and limited imputed-income treatment applies for aggregate loans under $100,000. A written note with a repayment schedule is the simplest way to keep a loan from looking like a gift.

Selling a Home You Own Together

The principal-residence exclusion lets a single filer exclude up to $250,000 of gain if they owned and used the home as their main home for at least two of the five years before the sale. A married couple filing jointly can exclude up to $500,000 when at least one spouse meets the ownership test and both meet the use test.¹⁵

Unmarried co-owners each apply the $250,000 exclusion independently. If both partners are on the deed and both lived in the home for at least two of the past five years, together they can exclude up to $500,000, matching the married result. The problem arises when only one partner is on the deed. The partner not on title cannot meet the ownership test and gets no exclusion at all, leaving their share of the gain fully taxable. Adding a partner to the deed later solves the ownership problem but is itself a gift of a partial ownership interest, well above the $19,000 annual exclusion for any home of meaningful value. Titling decisions made early matter more here than anything you can do at closing.

What Happens When One Partner Dies

Step-Up in Basis

When a married person dies, the surviving spouse generally gets a stepped-up basis on the deceased spouse’s share of jointly owned property, resetting it to fair market value at the date of death. In community property states, both halves step up. Unmarried co-owners do worse: only the deceased partner’s fractional share gets stepped up. Your half keeps its original purchase-price basis, so when you eventually sell, the gain on your half remains fully taxable, potentially after years of appreciation.

Estate Tax

There is no marital deduction for an unmarried partner. Assets your partner leaves you above the lifetime exclusion ($15,000,000 for 2026) can be taxed at rates up to 40%.¹³ Few estates reach that ceiling, but the absence of a marital deduction means every dollar of the exemption has to do real work.

Inherited Retirement Accounts

A surviving spouse can roll an inherited IRA into their own and continue tax-deferred growth on their own schedule. An unmarried partner is a non-spouse beneficiary and, under the SECURE Act, must empty the inherited account within 10 years of the owner’s death.¹⁶ That compressed timeline forces bigger annual withdrawals and can push you into a higher bracket during those years.

Social Security Survivor Benefits

An unmarried partner cannot collect on the deceased partner’s Social Security record. Survivor benefits require a legal marriage of at least nine months before death.¹⁷ A cohabiting relationship of any length creates no eligibility. Where one partner earned significantly more, that gap can mean tens of thousands of dollars a year that a legal spouse would have received automatically.

1
Internal Revenue Service. Filing Status
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
3
Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information – Section: Head of Household
4
Internal Revenue Service. Filing Status
5
Internal Revenue Service. Revenue Ruling 2013-17
6
Internal Revenue Service. Dependents
7
Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information – Section: Support Test
8
Internal Revenue Service. Understanding the Credit for Other Dependents
9
Internal Revenue Service. Qualifying Child Rules
10
Internal Revenue Service. Other EITC Issues
11
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction – Section: More Than One Borrower
12
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses – Section: How Much of the Expenses Can You Deduct
13
Internal Revenue Service. What’s New – Estate and Gift Tax
14
Internal Revenue Service. Instructions for Form 709 (2025) – Section: Who Must File
15
Office of the Law Revision Counsel. 26 USC 121 Exclusion of Gain From Sale of Principal Residence
16
Internal Revenue Service. Retirement Topics – Beneficiary
17
Social Security Administration. Who Can Get Survivor Benefits