Single parents have a slightly different way of filing their taxes than couples that are legally married. As a single parent, the four options below will help to lower your income that’s taxable and get more tax refunds.
A). Determine who has custody of the kids
In the case when the parents are separated or divorced, one of the parent is given the right for the child to live with him or her. Then he or she claims they depend on his or her tax return. However, this is not always the case. Sometimes parents can agree on who gets to claim the kids, irrespective of who has custody. For tax reasons, what is often most important is who the child lives with most of the time.
- The IRS put into consideration the place a kid sleeps as a significant determining factor.
- When it comes to who takes custody of the child, the IRS may overlook a divorce decree or separation agreement.
- The IRS will likely give a parent the right to claim the child with the tax return when the child has spent a great deal of time with such a parent ( at least half of the year).
B). Getting a tax credit for the child
When you file as a single parent head of a household earning less than $ 75,000 during the tax years before 2018, you most likely will be eligible to claim a tax credit for the child. This credit can reduce your taxes by $ 1,000 per eligible child. If there is an extra credit remaining after deducting the credit from income taxes, you can return it as a tax refund.
According to domyhomeworknow.com, in the early part of 2018, the child tax credit rose to $ 2,000 for eligible children. As a result, a single parent can earn up to $ 200,000 before the credit is limited. Additionally, even if you do not owe any tax, $1400 of credit should be refunded. To become eligible for the credit, the child will need to complete six tests, which are as follows:
C). File as head of household
When you file as head of household, it can give you an opportunity to get a higher standard deduction than filing just as single. This can help lower your taxable income and save you money. However, you must meet certain requirements to become eligible as a single household head:
- You must pay more than 50% of household expenses
- Proof that you married on December 31st of the tax year
- Your kid has been living with you for over half a year except he lives in school.
D). Dependent Care Credit should be Included
The IRS allows single parents to claim a percentage of paid childcare expenses that allow them to work outside the home or seek employment with a Dependent Care Credit. You can claim Childcare expenses for your children aged 12 years old and below. Also, up to $ 3,000 is allowed for one child and $ 6,000 for two or more children. Furthermore when your child turns 13 in the tax year, you can only claim credit for the portion of the year when he was 12.
There has to be an agreement between you and your ex-spouse or partner to file taxes as a single parent. The parent in custody usually claim the kid as a dependent, but not in all cases. Consequently, a single parent may request applicable deductions and exemptions for each eligible child.