American Dream

Tax Breaks for Single Parents: 6 Filing Tips and Credits

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Managing your finances as a single parent is no easy task. Come April, many feel overwhelmed by the idea of taking care of their taxes. Fortunately, there are many tax breaks for single parents that can offset some of the costs of managing the household on your own. Here are six examples that can help you this tax season.

1. Credit for Having Children

The fact that you have children gives you the opportunity to take advantage of the Child Tax Credit. This credit is for $1,000 per child under 17 years of age if you are unmarried and make less than $75,000 in adjusted gross income.

2. Lower Tax Rate for Head of Household

If you pay more than half the costs associated with homeownership and maintenance, and your children have been living with you for six months to a year or more in total, you will need to file as the head of household. This can lower your tax rate significantly which means you could have more disposable income available for the year.

3. Earned Income Tax Credit

Single parents with a full house of three or more kids who earned less than $46,997 are eligible to take advantage of the Earned Income Tax Credit. This can also reduce your tax burden as a low-income family, making it just a little easier to manage the household budget.

4. Adoption Credits

If the process of adoption was finalized in the previous year, you may be eligible for a significant amount in federal tax credits for each adopted child. For example, adoptions that were finalized in 2014 allow the parent up to $13,190 in federal tax credits per child.

5. Childcare Expenses

If you are filing as head of household and are paying for childcare services, you may be able to claim up to $3,000 for one child or $6,000 for two or more children depending on the type of childcare services. However, if you earn more than $75,000 for the year, you may not be eligible for this type of credit.

6. Dependent Exemption

Claiming your child or children as dependents is another tax break for single parents that are filing as head of household. You can claim an exemption of $3,950 per dependent for 2014 as long as your income does not exceed $279,650.

Taking care of taxes as a single parent can be a challenge but you may be able to reduce your tax liabilities significantly based on the number of dependent children you are taking care of. Eligibility requirements of tax breaks for single parents vary based on income, but many parents can take advantage of at least two or even three credits in any given year. Are you maximizing your refund?