Updated: Feb 17, 2021
Being a parent is a full-time job, especially for single parents. So naturally, there are tax implications to keep in mind when filing your 2016 income tax return in April 2017. You’re bound to have questions about your filing status and what potential deductions and tax credits you’ll qualify for, especially if this is your first time doing your taxes as a single parent. But being armed with the right knowledge can help take the stress and guesswork out of filing your taxes as a single parent. And it could help you save money, too.
Here is a list of five tax breaks single parents should be aware of and consider taking advantage of if they qualify.
File as “Head of Household” Filing as “head of household” has two benefits for single parents. First, you will pay fewer taxes overall. Second, you’ll also be able to claim a higher standard deduction. In 2017, the standard deduction for a head of household is $9,350. Generally, you qualify for “head of household” status if you were unmarried on the last day of the year, you provided more than 50 percent of the funds needed to maintain your household and your children lived with you for more than half the year. If you have any questions about whether you qualify, you should speak with a reliable tax representative in your area.
The Dependent Exemption Single parents who file as “head of household” for 2017 will be able to claim an exemption for themselves and each qualifying child. This means that for each exemption, part of your income would not be taxed. Keep in mind, though, that only one parent can claim each child as a dependent for tax purposes. Those parents who share approximately equal custody will need to determine which parent will claim the dependent exemption for each child.
Child Tax Credit A credit is different from an exemption because, as a credit, it is subtracted from the total amount of taxes you owe, and this can add up to substantial savings. The maximum credit you can take for each child is $1,000. In order to qualify for the Child Tax Credit, the qualifying child must meet certain requirements set forth by the IRS, including being under the age of 17 on the last day of the year. Additionally, If the amount of your Child Tax Credit is more than the amount of tax you owe, you may be eligible to claim the Additional Child Tax Credit, allowing you to receive a tax refund for the unused portion of your Child Tax Credit.
Child Care Tax Credit If someone else cared for your child so that you could either work or look for work, you may be eligible for child and dependent care expenses. In order to qualify, though, your child must be have been under the age of 13 for at least part of the year. In addition, the person who was responsible for taking care of your child can not be the child’s other parent or anyone who can claim you as a dependent. Also, in order to be eligible for the child care credit, you must have actually earned an income during the year. So, that means that if you are a stay-at-home parent or are between jobs, you would not qualify to receive the child care credit when you file your taxes.
Earned Income Tax Credit
This credit was designed to help low-income and moderate-income, working families. Even if you did not earn enough money to owe taxes, you may be eligible for a refund through the Earned Income Tax Credit (EITC). Beginning in 2017, if you claim the EITC or Additional Child Tax Credit (ACTC) on your tax return, the IRS must hold your refund until at least February 15, even the portion not associated with EITC or ACTC, according to the IRS.