Especially if this is the first time you'll be doing your taxes as a single parent, you may have questions about your filing status and what potential deductions and tax credits you may qualify for. Here is a list of five tax breaks every single parent should consider:
Filing as "Head of Household" can serve two benefits for single parents: You'll pay less taxes overall, and you'll also be able to claim a higher standard deduction. Generally, you qualify for "Head of Household" status if you were unmarried on the last day of the year, you provided more than 50% of the funds needed to maintain your household, and your children lived with you for more than half the year.
Single parents who file as "Head of Household" for 2008 will be able to claim an exemption of $3,500 for themselves and each qualifying child. This means that for each exemption, $3,500 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.
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.
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.
This credit was designed to help low-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. Use the
EITC Assistant to find out whether you qualify.
