Single Parents can Benefit from Tax Breaks. (Photo: Yahoo Finance)
Filing taxes can be a chore for anyone, but it is challenging for busy single parents. The good news is that single parents can benefit from tax breaks.
1. Determine Your Eligibility as Head of Household
Filing as head of household reduces taxable income for single parents. A filer must meet the following criteria to qualify as head of household:
- Pay for more than half of household expenses
- Being single on the last day of the tax year
- Allow their child to live with them for more than six months of the year.
2. Learn Who Is Eligible for the Child Tax Credit.
The child tax credit may be available to single parents earning less than $200,000 ($400,000 if married and filing jointly). The child must have been under 17 at the end of the tax year for the parent to be eligible for the child tax credit. The child must be a United States citizen.
READ ALSO: Child Tax Credit: A Guide for New Parents
Single Parents can Benefit from Tax Breaks. (Photo: Parents Together)
3. Determine the Eligibility for the Child and Dependent Care Credit.
Only custodial single parents can generally claim the dependent care credit. However, there are some exceptions.
Payment for dependent care does not qualify for the credit if the caregiver is one of the following:
- Anyone listed as a dependent on your tax return
- A parent of the child receiving care
- Your 18-year-old or younger child
4. Learn How the IRS Handles Child Support and Alimony
Child support is not taxable income. Furthermore, those payments are not deductible if a parent pays child support.
5. Claim Educational Tax Credits
Single parents must be aware of all tax credits and deductions available to take advantage of as many as possible.
Three basic criteria must be met in addition to other rules specific to each credit:
- Higher education qualified education expenses must be paid by the parent, dependent, or a third party.
- A student must be enrolled in an eligible educational institution.
- The eligible student must be listed as a dependent on the filer’s tax return.
6. Determine Your Earned Income Tax Credit Eligibility
Some parents may be eligible for the earned income tax credit. Parents with less than a certain amount of earned income can earn credits ranging from $3,733 to $6,935, depending on their filing status and the number of children.
7. Adoption Expenses Can Be Deducted
Adoptive single parents can claim a nonrefundable adoption credit for the fees, legal costs, and travel expenses associated with a legal adoption. Furthermore, adoptive parents are not required to pay taxes on income received from adoption assistance provided by their employers.
8. If You Qualify, Take Advantage of Free Tax Return Preparation.
The complex IRS rules can be confusing when filing taxes as single parents, but you deserve to maximize your savings and get some money back.
