When you have children, you may qualify for a number of credits or deductions that can increase the tax refund you receive…or at the very least, help reduce the amount of taxes you owe. Being a single parent isn’t easy, but here are some important tax breaks that can make things a little easier when tax season rolls around.
File as “Head of Household” – When you file as “Head of Household” you pay less taxes overall and claim a higher standard deduction. You must be unmarried or legally separated, and you must provide more than 50% of the funds needed to maintain the household. Additionally, your children must have lived with you more than half the year.
Child Tax Credit – A credit is subtracted from the total amount of taxes you owe. The maximum credit is $1,000 for each child, and the child must be under 17 years old on the last day of the year. Also, the child must have lived with you more than half the year.
Dependent Exemption – Single parents who file as “Head of Household” for 2012 will be able to claim an exemption of $3,800 for themselves and each qualifying child. Only one parent can claim each child as a dependent for tax purposes.
Child Care Credit – You may be eligible for child care expenses if someone cared for your child while you were either working or looking for work. The person caring for your child cannot be the child’s other parent or anyone who can claim you as a dependent. The child must have been under 13 for part of the year. In addition, you must have actually earned an income during the year.
Earned Income Tax Credit (EITC) – This is geared toward families with low to moderate incomes. It reduces the amount of tax you owe and may also give you a refund, even if you don’t owe any taxes. To qualify, you must have a valid Social Security number and you must have had some kind of income. Your child/children must be under 19 years old or under 24 years old and a full-time student. If the child is permanently disabled, age does not matter.