Guide to tax breaks for single parents

Being a single parent is unbelievably hard. Aside from making sure that your kid(s) grow up to be decent human beings, you also need to wrestle with financial issues every single day, as well as keep up with your taxes. Luckily, the government offers several tax breaks for single parents which you can take advantage of. When it comes to tax debt relief options, your best bet would be to enlist professional tax services but there is something you can do on your own, as well. You can get to know all the options you have to make your tax situation a little bit easier. And that is what we are going to cover in this article. We will explain why filing as a head of the household is so important, provide you with single-parent tax brackets, and detail all the available tax options you have at your disposal.

Filing as a head of the household

Many parents are unaware that their filing status heavily influences their tax deduction amount. If you select the “single” filing option, you are practically depriving yourself of numerous tax benefits. Filing as a head of the household offers a way toward many popular tax deductions and even allows you to reduce your taxable income. However, to be able to file as a head of the household, you will need to qualify first.

Qualifying for the head of a household status

To qualify for this status, you will need to satisfy three conditions:

  • You will need to pay more than 50% of the household’s expenses
  • Your child will need to live with you for more than six months per year, excluding the time your kid spends at school.
  • You need to be at least considered unmarried on the last day of the tax year.
person and their kid
Your child needs to live with you for at least half a year.

Furthermore, if you are sharing custody of your children with someone, you will need to have more than 50% custody to be eligible for “head of the household” status. If you have less, you will not be able to get tax benefits. The standard deduction for this status is $19,400 for the 2022 tax year, up from $18,800 in 2021. Also, this status allows you access to better tax brackets, meaning that you can earn more before you step into the next bracket. If you then couple these advantages with some of the most popular tax breaks for homeowners, for example, you may find that your financial situation has drastically improved. Head of household filing status presents amazing benefits but the qualification process can be a bit complicated at times. If you encounter any issues qualifying, you may want to speak to a tax professional.

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Single parent tax brackets

person showing the money from tax breaks for single parents
Filing as a head of household can save you quite a bit of money.

In 2022, single filers pay a 10% tax on their earned income up to $10,275. Heads of households can earn up to $14,650 before they get to the next bracket. This means that you can earn almost $4,500 more if you obtain the head of the household status. Here is the full comparison of tax brackets, according to the Internal Revenue Service:

  • 10% tax rate for single filers – $0 to $10,275
  • 10% tax rate for heads of households – $0 to $14,650
  • 12% tax rate for single filers – $10,275 to $41,775
  • 12% tax rate for heads of households – $14,650 to $55,900
  • 22% tax rate for single filers – $41,775 to $89,075
  • 22% tax rate for heads of households – $55,900 to $89,050
  • 24% tax rate for single filers – $89,075 to $170,050
  • 24% tax rate for heads of households – $89,050 to $170,050
  • 32% tax rate for single filers – $170,050 to $215,950
  • 32% tax rate for heads of households – $170,050 to $215,950
  • 35% tax rate for single filers – $215,950 to $539,900
  • 35% tax rate for heads of households – $215,950 to $539,900
  • 37% tax rate for single filers – $539,900 or more
  • 37% tax rate for heads of households – $539,900 or more

As you can see, the most benefits are found within the 12% tax bracket, as heads of households can earn quite a bit more before going to the 22% tax bracket. However, once you do reach that bracket, it will not matter whether you are head of the household or not, at least where the tax brackets are concerned.

But getting the head of the household status is just the start. While being practically essential, it is but one of the many tax breaks for single parents. Let’s take a look at some of the other options you have at your disposal.

Tax breaks for single parents – Available options

Here’s a quick overview of all the popular tax breaks for single parents:

  • Child Tax Credit
  • Earned Income Tax Credit
  • Adoption Credit
  • Child and Dependent Care Tax Credit

Aside from these tax breaks, you have access to numerous other tax relief options. In addition, you may want to brush up on your last-minute tax filing skills if you frequently find yourself filing taxes at the last moment. While you should always file your taxes as soon as possible, the duties and responsibilities of being a single parent might occupy most of your time and mental energy. That said, let’s take a look into these particular tax relief options in a bit more detail.

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Child Tax Credit

four children
You can claim the child tax credit for each child you have.

This is the “quintessential” tax credit for single parents. The child tax credit is much better than a tax deduction, as it has the potential to exceed the taxes that you owe. That is why it is one of the most popular ways to boost your tax refund amount. Basically, what this means is that you may even be issued a refund from the IRS in certain situations. The maximum value of this tax credit depends on the age of your child, as well as your income limit. Needless to say, being a head of household significantly increases this limit. But if you happen to earn more than $112,500 a year, the child tax credit will be phased out.

There are several requirements that your child needs to fulfill in order to be eligible for this credit. They include:

  • Being under the age of 18 at the end of the tax year
  • Be one of the following: Son, daughter, eligible foster child, sister, brother, grandchild, niece, nephew, stepsister, stepbrother, half-sister, half-brother, or stepchild.
  • They need to have lived with you for more than half the entire year
  • Be categorized as your dependent
  • Are a U.S. national, U.S. citizen, or U.S. resident alien

Furthermore, your children may not provide more than half of their own financial support throughout the year. You can qualify for the full amount of the Child Tax Credit for each child that meets all the eligibility factors set by the IRS, provided that your income is lower than $112,500 for heads of households or $75,000 for single filers. If your income is higher than that, you may be able to claim a partial credit.

Earned Income Tax Credit

The second most popular tax break for single parents is the Earned Income Tax Credit (EITC). This credit was specially designed to allow families with lower incomes to keep ahead of their taxes. This line of credit is fully refundable, as well. EITC is based on the number of qualifying children, with a maximum value of $6,728 for families with three or more children. Here’s the full breakdown:

  • 1 Child = Maximum EITC value of $1,502
  • 2 Children = Maximum EITC value of $3,618
  • 3 Or more children = Maximum EITC value of $6,728

It may also happen that your children do not yet have Social Security numbers but fulfill all of the other criteria. In that case, you may be able to claim the EITC via the American Rescue Plan Act, under the terms for childless households. Lastly, you might want to know that your refund will be held until around mid-February, as the government takes time to ensure the legitimacy of the claimer. Claiming EITC is an excellent way to cut your tax bills and ensure that you save as much money on taxes as you possibly can. It is one of the best tax breaks for single parents you have at your disposal. Again, if the claiming process seems to be too complicated, you may want to consult a tax professional.

Adoption Credit

a couple adopting a child
If you’re adopting a child, you are eligible for an adoption credit.

If you happen to have adopted a child, you can claim the adoption credit. This credit, however, is not refundable like the previous two options, meaning that you need to have an actual tax liability for it to apply. The credit itself applies one time for each adopted child, and you should claim it on your tax return. Here are the eligibility rules:

  • You must have adopted a child other than a stepchild, who is either under 18 years of age or unable to take care of themselves.
  • You need to stay within the income limits.

The value of this credit is quite substantial, at $14,890 for the tax year of 2022.

Child and Dependent Care Tax Credit

The child and dependent care tax credit (CDCTC) is aimed to alleviate childcare expenses. This is yet another fully-refundable line of credit, one that can save you up to $8,000 per year. You may be eligible for CDCTC if your child(ren) is/are under the age of 13, or disabled if older. Furthermore, the person who is taking care of the child must not be a parent or anyone that you also claim as a dependent on your tax return. The CDCTC offers a 50% reduction of expenses for childcare services, up to a maximum value of $4,000 per child.

That means that if you spend $8,000 on childcare services, you get $4,000 back! The credit “caps” at two children and you will be unable to claim it if your income is $438,000 or more. While these were the most popular tax breaks for single parents, it is entirely possible that you qualify for many other tax relief options. Therefore, it might be in your best interest to consult a tax expert if you want to maximize your tax return.

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You can find more information on taxes, as well as information about some of the best tax relief services in the country right here, at the Consumer Opinion Guide. Our knowledge database holds the answers to all your tax-related questions!

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