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5 federal tax deductions single parents should be aware of

If this year will be your first time filing income taxes as a single parent, there are several issues you should be aware of, including your filing status, children you can claim as dependents and a series of possible deductions.

First, you may be able to file head of household and be taxed at a lower rate with higher deductions if you were unmarried as of Dec. 31, 2014, you earned at least 50 percent of your household income, and your children lived with you at least six months out of the year, in total.

Next, it’s important to know whether you can claim any of your children as dependents. The IRS defines a child as a dependent if that child lived with you for at least six months out of the year and you were responsible for financially supporting the child during that time.

However, many divorce decrees and separation agreements set out which parent will be able to claim the children as dependent, and the IRS also allows parents who would normally be able to claim their children as dependents to waive this right in writing.

Additionally, there are many federal tax deductions that may apply to single parents, five of which we will discuss here:

Dependent exemptions. Heads of household can deduct $3,950 for each dependent child in tax year 2014, though the exemption fades out for people earning $279,650 or more in income.

The child tax credits. Different from the exemptions, single parents who earn $75,000 AGI or less can subtract $1,000 for each dependent child 16 or younger on Dec. 31, 2014 from their tax bill.

Child care deduction. Heads of household with an income or who are full-time students can deduct up to $3,000 for one child or $6,000 for two or more children for child care expenses. The exemption fades out for heads of household earning $75,000 or more.

Dependent care flexible spending accounts. Heads of household can contribute as much as $5,000 tax-free into a employer- or business-provided dependent care spending account to cover child care expenses for dependent children.

Earned income tax credit. If you are a single parent earning $46,997 and have three or more kids you can qualify for this credit, which maxes out at $6,143. Single parents with fewer children and a lower income may also qualify.

Source: Forbes, “8 Things Single Moms And Dads Need To Know About Taxes,” Emma Johnson, Jan. 26, 2015