Raising a child on your own changes a lot of things. You probably have less free time than before, for one thing, and you might find yourself facing difficult choices from time to time. Tax options for single parents are also a bit different from the options available to people without kids or to people in two-parent households. These options can help you get a bigger refund or make the most of your tax return.
Head of Household Status
As a single parent, you are most likely able to claim head of household status, instead of filing as a single person. Head of household status means you have a slightly higher standard deduction than single filers, $9,100 instead of $6,200. You can also earn a higher amount of income but fall into a lower tax bracket when you file as head of household. To qualify for the status, you need to be unmarried at the end of the tax year, have at least one dependent who lives with you for at least half of the year, and pay for the majority of your household’s expenses.
Dependent Exemption and Child Tax Credit
Two additional tax options for single parents to be aware of are the exemption for your dependents and the child tax credit. You are allowed to claim one exemption per dependent. For each exemption, you can subtract $3,950 for 2014 tax returns. Your child counts as a dependent if he or she is under age 19 or under age 24 and a student, you provided more than half of his or her support, and he or she lived with you for more than half of the year.
The child tax credit can help you save even more on your tax return, as it reduces the amount of tax you owe by up to $1,000 per child. To claim the credit, you need to earn less than $75,000 per year, and your child needs to be age 16 or younger at the end of the tax year.
One tax benefit that is of particular use to working, single parents is the credit for childcare expenses. If you send your child to day care or hire a babysitter to look after him or her, you can claim a tax credit for up to 35 percent of the cost of child care. Keep in mind that if your employer offers any help to pay for child care, you’ll have to deduct that from the amount of your credit. The percentage of your child care expenses you can take as a credit gets smaller the higher your income, too.
If you receive child support from the other parent of your children, you might wonder how it will affect your taxes. The good news is that child support isn’t considered taxable income by the IRS, so you don’t have to include it on your tax return. If you are paying child support to your former spouse or partner, you can’t deduct the amount you pay from your income, either.
Having kids and raising them on your own raises your cost of living. Fortunately, income tax rules are designed to consider all factors of your life, including the additional expenses of raising children, when determining what you owe. Claiming the credits and deductions you’re allowed will help make your tax burden a bit easier to bear.
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