Welcome back. Being a single parent can be emotionally, physically and financially draining. That's why single and unmarried parents should do what they can to maximize their federal income tax return. There are many credits and deductions that apply to single parents, so make sure that you don't miss any.
In our last post, we discussed the issues of filing head of household (which opens the door to many additional tax credits and deductions) and determining which children, if any, you can claim as dependents.
Now we will move on to the deductions that you should be aware of:
- For tax year 2014, you can deduct up to $3,950 for each dependent child. (But the deduction fades out for heads of household who earn $279,650 or more per year.)
- Unmarried parents who earn an adjusted gross income of $75,000 or less can claim a deduction of $1,000 for each dependent child who was 16 or younger on Dec. 31, 2014.
- Heads of household who earn an income or are full-time students can deduct up to $3,000 for one child or $6,000 for two or more children for expenses related to qualifying child care. (The deducted fades out for single heads of household earning $75,000 or more.)
- Single parents who have three kids or more and earned less than $46,997 can take the take Earned Income Tax Credit. Single parents with one or two children who earn less may also qualify.
This is just a quick roundup of tax issues and deductions that single and unmarried parents should be aware of. Of course, the best way to maximize your tax savings is by working with a tax professional.
Source: Forbes, "8 Things Single Moms And Dads Need To Know About Taxes," Emma Johnson, Jan. 26, 2015