If you are a single parent you know you can face some only one of its kind situations in life, this can include things that come up at tax time as well. Before you file your taxes, you should check out these federal tax considerations:
Head of Household – If you were single on the last day of December 2014, had dependents living with you for 6 or more months throughout the year and made 50% of more of the household income you can file as Head of Household. This can reduce your tax rate and allow you to claim higher deductions.
Who is a dependent? – A dependent can affect how many credits and deductions you can claim on your tax return. If you are separated or divorced this is usually agreed upon by both parties as who can normally claim the child as a dependent. A parent who normally holds the right to claim a child can sign a waiver allowing a non-custodial parent to claim them. You are not able to split a deduction for a single child, there are many parents who make agreements such as alternating the years and which parents claims the children, or in the case of more than one child each parent claims at least a child. The IRS considers a dependent child as a child who has lived with a parent for at minimum six months during the year and was supported financially for that time.
Exemptions – In 2014 you can deduct $3,950 for every qualified dependent child. If you claim Head of Household and make $279,650 or more you are unable to claim this deduction
Credits – If you earn $75,000 or less Federally Adjusted Gross income, you are able to claim a credit of $1,000 Per each dependent child that is 16 years of age or younger on the last day of December.
Child Care Credits – If you use the Head of Household status, pay for qualified child care, have an income or are a full time student you can claim $3,000 for one child or $6,000 for two or more children. This can include such things as day camps and after school programs. If you earn above $75,000 you cannot claim this credit with a Head of Household filing status.
Dependent Spending Accounts – Employer provided accounts can allow you to contribute up to $5000 that is tax free to pay for dependent care and expenses.
Earned Income Credit – You can qualify for this credit if you have three or more dependent children and earn less than $46,997 as a single parent, if you have two or less children you may qualify for this credit based on income. The maximum amount of this credit is $6,143.
Adoptions Credits – If you finalized an adoption in 2014 you are eligible to claim up to $13,190 in federal tax credits per adopted child.