Make the Most of Your Tax Return with Single Parent Tax Credits

The life of a single parent is often filled with unique challenges unbeknownst to those who've never played this role. Many single parents perform most (if not all) of the daily duties that come with raising a child. In addition to often being the person primarily responsible for the day-to-day responsibilities of child-rearing, many times, single moms and dads also have a greater financial responsibility than two-parent households, as well.

When tax time rolls around, single parent tax credits and deductions can help to offset the financial burden felt by many of these families throughout the year.

If you're one of the millions of Americans raising your children solo, read on for important tips that can help you make the most of your tax return this year!

How Single Parenting Impacts the Household's Income

It might appear obvious that single-parent households tend to have reduced overall incomes compared to those households receiving more than one paycheck. But, the financial repercussions of single parenting often spills over into other areas, as well.

According to recent statistics, it's become much more common for children to be born to unmarried parents than it was in years past. Last year, 40 percent of all of the babies born in America were to unwed mothers. In 2018, there were over 11.3 million single-parent families in the United States, while over 80 percent of these were headed by single moms.

Nearly two-thirds of single moms were working at any given time during 2018, but females still have less earning power than males in the U.S. workforce. 

When money is tight, it's common for parents to have to worry about having enough to eat. A third of single mothers were reported “food insecure” in 2018. About 40 percent of children with single moms received food stamps and around two-thirds participated in a free or reduced meal program.

Poverty strikes single-parent homes at a much higher rate than those with two parents. Around 40 percent of homes led by single mothers lived in poverty during 2018, yet, just 12 percent of two-parent households shared this distinction.

Of course, financial struggles often lead to stress and tension. But, money woes can also mean reduced healthcare and unmet nutritional needs, for both parents and children, at times.

Why Single Parents Should Pay Special Attention When Filing Their Taxes

In order to qualify for many forms of public assistance, parents must provide their tax returns and/or proof of income. This is just one of the reasons that it's important for all parents to report accurate information when filing their taxes. A mistake could mean that you're denied for certain assistance programs, even if you're actually eligible based on your income.

You might also be required to provide tax information when applying to rent or purchase a home. And, you may need to rely on your taxes to obtain additional loans, as well.

Plus, there are specific tax credits and deductions reserved for single-parent households that can influence the amount of money that's returned to you or that you're required to pay after taxes.

Failing to claim the appropriate tax credits can hurt you in other ways, too. Misreporting items such as childcare expenses or adoption expenses might even result in having your taxes audited. You can speak with a tax attorney to learn more about the implications of a tax audit. 

Single Parent Tax Credits You Don't Want to Miss

There are several rewarding tax credits that are available to single parents. Some of these offer substantial gains for the affected taxpayer.

Child Tax Credit

The Child Tax Credit is meant to offset the cost of raising a child. You may be eligible for a credit of up to $2,000 dollars for each qualifying child under the age of seventeen years old.

Credit for Other Dependents

Even if your dependents don't qualify for the Child Tax Credit, you may be able to receive a Credit for Other Dependents for up to $500 dollars. This tax credit could apply to children over the age limit or children which you support, but do not have legal custody of.

Earned Income Credit

The Earned Income Credit can give you a tax credit and can also result in a refund, as well. However, this credit is especially for low-income taxpayers who have earned wages from employment.

Child and Dependent Care Tax Credit

If you have children under the age of twelve years old or if you care for a dependent with a mental or physical handicap, and you pay someone who's at least nineteen years old to provide care while you work or look for work, then you may be able to claim a credit of up to $3000 dollars.

Adoption Credit

Parents who adopt are able to claim the Adoption Credit. Allowable expenses that are allowed for this credit include adoption fees and legal fees. But you can also include other expenses directly related to the adoption process, such as meals and lodging, travel, and other associated costs.

Education Credits

If you have a student who is enrolled in their first four years of post-secondary education, you can claim the American Opportunity Tax Credit for up to $2,500 dollars. A student must be enrolled at least half-time to be able to claim this credit.

Also available as a credit for education expenses is the Lifetime Learning Credit. It's allowable for 20 percent of a maximum of $10,000  (for a total credit of $2,000 dollars) during any and all years that a student is enrolled in postsecondary education.

You should note that students can claim either one of these credits, but they can not claim both of them at the same time.

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