Tight economies and lower wages make it ever important for single parents to take advantage of all available tax credits and deductions on their federal income tax returns. Several are available ranging from the traditional child tax credit, to credits for child care expenses and various itemized deductions.
Child Tax Credit
This is a $1,000 tax credit per child in the cases of most single parents. The amount of the credit goes down if the household income is more than $75,000 and the filing status is single, qualifying widow(er) or head of household. Parents with primary custody get the use of this credit, but if custody is shared 50/50, parents can alternate years that they claim the credit.
Child Care Credit
This is a credit that many single moms and dads can apply to their taxes if they must hire child care providers so the parent can work. In 2012, those who had to hire child care providers in order to go to work could claim up to $3,000 in expenses for one child, and up to $6,000 for two or more children. To claim this credit, the name and tax ID number of the child care provider must be entered in the tax form at filing time. IRS Form 2441 must be completed and attached to your 1040 tax return to claim the child care tax credit.
Education Tax Credits
The American Opportunity Tax Credit applies to the first four years of post-secondary education. It can be worth up to $2,500 per student for parents or dependents enrolled in college. The credit is a full dollar subtraction from taxes on a certain portion of tuition expenses.
The Lifetime Learning Credit allows for a maximum credit of up to $2,000 for post-secondary tuition and fees for most students. This credit is good for every year of enrollment in college or graduate programs.
Both credits cannot be claimed by one taxpayer within the same tax year for the same student.
Here, one has to figure out if the sum of itemized tax deductions is greater than the standard deductions. If it is, there are several deductions that can benefit single parents at tax time, including the deduction of medical and dental expenses that exceed 7.5 percent of your adjusted gross income, contributions to charity and some work expenses. A good strategy is to use an online tax service to calculate taxes with both itemized and standard deductions, then see which is more beneficial.
Claiming College Students as Dependents
Parents can continue to claim their college students as dependents if their children are enrolled full-time; but, be careful on this one, and communicate with the children when doing this. If the children are working side jobs in college, they are not permitted to claim an exemption on themselves if their parents already have done so.
Earned Income Tax Credit
The Earned Income Tax Credit is a refundable tax credit intended to offset the burden of Social Security taxes and provide incentive to work for families and individuals with low or moderate incomes. When the Earned Income Tax Credit is more than the total in taxes owed, eligible filers are entitled to refunds. In general, the 2013 parameters for eligibility to claim the EITC for parents include: --more than two children and earned income of less than $46,227 individually. --two children and earned income of less than $43,038 individually. --one child and earned income of less than $37,870 individually. The IRS provides an online questionnaire to determine if your child or children qualify for the credit.
- Internal Revenue Service: Tax Information for Parents
- Internal Revenue Service: Dependents and Exemptions
- Internal Revenue Service: Publication 972: Child Tax Credit
- Internal Revenue Service: Publication 970 Tax Benefits for Education
- Internal Revenue Service: EITC Income Limits, Maximum Credit Amounts and Tax Law Updates
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