Breadwinner

What Is a Breadwinner?

A breadwinner is a colloquial term for the primary or sole income earner in a household. Breadwinners, by contributing the largest portion of household income, generally cover most household expenses and financially support their dependents.

Understanding Breadwinners

The term breadwinner is sometimes used to refer to single-income families in which one of the members works to generate income and the other stays at home to care for dependents. In other situations, a household may be a dual-income household but have only one breadwinner.

In dual-income households, the breadwinner is the one with the more profitable and economically sound job. The other income earner, who may be working part-time or can afford to leave the workforce, is simply “earning,” but not necessarily a breadwinner.

Breadwinner as Head of Household

For tax purposes, a breadwinner may file their taxes as head of household. The Internal Revenue Service (IRS) defines a breadwinner as a single or unmarried taxpayer who pays at least 50% of the costs of supporting a household and provides support to other qualifying family members living under the same roof for more than half of the year.

This means that the breadwinner must have paid more than half of the total household bills, including rent or mortgage, utility bills, insurance, property taxes, groceries, and repairs. Some examples of qualifying family members include a dependent child, grandchild, brother, sister, grandparent, or anyone else you can claim as an exemption.

Heads of households benefit from a lower tax rate. For instance, the 12% tax bracket applies to single filers with an adjusted gross income (AGI) of between $9,876 and $40,125 for the tax year ended 2020. The 12% tax bracket for heads of households, meanwhile, applies to AGI that falls between $14,101 to $53,700. In other words, an individual that earns $50,000 will pay 12% income tax as a head of household and 22% if filing as a single individual.

For 2020, the head of household standard deduction is $18,650, which is significantly higher than the $12,400 standard deduction single filers and married individuals who file separate returns can claim. Married taxpayers who file joint returns get a $24,800 deduction. This works out as a $12,400 deduction for each of them, still well below the head of household amount.

Married Breadwinner Filing Jointly or Separately

Tax law was designed to benefit married couples with one main breadwinner and one stay-at-home spouse. If one spouse isn’t working or was starting a business and had losses, the couple will benefit when filing jointly.

A married taxpayer who is the breadwinner of the household may choose to file taxes jointly with their spouse, rather than separately, to reduce the tax liability. Breadwinners may find that they are in a higher tax bracket if they file taxes separately — the higher the tax bracket, the higher the tax bill.

As you can see in the table below, a breadwinner who earns $78,000 in annual income and files jointly with a stay-at-home spouse will pay 12%. Should, however, the same breadwinner choose to file separately, the tax rate applied to this income would be 22% instead.

2020 Tax Brackets

Married Filing Jointly

Married Filing Separately

$0 - $19,750

$0 - $9,875

$19,751 - $80,250

$9,876 - $40,125

$80,251 - $171,050

$40,126 - $85,525

$171,051 - $326,600

$85,526 - $163,300

$326,601 - $414,700

$163,301 - $207,350

$414,701 - $622,050

$207,351 - $311,025

$622,050 or more

$311,025 or more

Source: Internal Revenue Service

There are times when filing separately from a spouse makes the most sense, such as when one person has expensive costs related to deductions based on AGI. For instance, medical expenses can only be deducted if they exceed 7.5% of your AGI. If a spouse has high medical bills, the joint income may be high enough that the breadwinner is unable to take advantage of that deduction. In such cases, filing separately might be appropriate.