RoxanneRaising children can be anything but affordable. Raise them on your own, and you may find yourself pinching every penny you can just to make ends meet.
Tax season can provide some financial relief if you know how to file correctly. What does filing “correctly” entail? Making sure you take advantage of the various tax breaks for parents.
We’ll take a look at the tax breaks in the form of deductions and credits that can help you maximize your refund. But first, let’s discuss some essential filing tips.
Using Head-Of-Household Status to Your Advantage
Your filing status can have a significant impact on the tax rate you’ll pay. By filing as head-of-household versus single, you can enjoy a lower tax rate.
If you meet these three eligibility requirements, make it your goal to file as head-of-household to score those tax savings:
- Your dependent lives with you for at least six months out of the year.
- You contribute over half of the household’s financial support.
- You’re unmarried on December 31.
Claiming the Child on Your Return and Not the Other Parent’s
If you’re separated or divorced, figuring out who can claim a child on their tax return can be a major issue.
How does the IRS determine who gets claiming rights? Several factors go into that decision, but one of the biggest ones is where the child sleeps.
If they sleep at your house for more than half the year, you have a solid case for claiming them on your return.
To get a clearer picture of this issue, visit the official IRS page for divorced and separated parents.
Tax Returns for Teenagers
If any of your children are in their teenage years and have a job, let them file their own tax return.
It gives them a good start with learning about taxes, and they’ll probably get a nice return once all is said and done that can be put towards college or down payment on their first car.
Tax Credits and Deductions for Single Parents
You may be able to use these tax breaks to snag some tax savings and maximize your return:
Child Tax Credit
You may be able to take advantage of the Child Tax Credit if you have kids under 17. Their eligibility starts the moment they’re born, and you could get up to $2,000 per child if you meet the income requirements.
To see if you’re eligible for this tax credit, go here.
Earned Income Tax Credit
The EITC can reduce how much tax you owe. It may even give you a refund.
There are income limits for this tax credit, and your filing status and number of children will also be taken into consideration.
You can learn more about the EITC by going here.
Out of Pocket Pregnancy Expenses
If you had a baby last year, you could get reimbursed for any related medical expenses that you paid out of your own pocket.
As long as the expenses exceed 10 percent of your adjusted gross income, you can list them as a deduction on your tax return.
Child and Dependent Care Tax Credit
If you have children under 13, you can get reimbursed for childcare expenses incurred while working or looking for work.
