If you're a single mom filing your taxes, make use of tax credits and deductions that can help reduce your taxable income and reduce the amount of tax you pay. A number of strategies, credits and deductions can be used to reduce taxable income, and in some cases, allow tax refunds even if you didn't pay in any taxes. When you use TurboTax, we'll ask simple questions and handle these calculations for you.
- File as head of household
- Establish qualifying dependents
- Claim the dependent exemption or dependent credit
• You can have a lower tax rate and a higher standard deduction if you file as head of household instead of filing as single or married filing separately.
• You may qualify as head of household if you’re unmarried on the last day of the tax year, pay more than 50% of household expenses for you and your child that lives with you for more than half of the year.
• If you file as single or head of household and make less than $200,000, you can claim a $2,000 Child Tax Credit (CTC) (tax year 2023) for each qualifying child.
• Up to $1,500 of the CTC is refundable for 2023 through the Additional Child Tax Credit for qualifying families.
File as head of household
Filing as head of household usually gives you a lower tax rate than if you file as single or married filing separately. It also allows a higher standard deduction. To qualify for head of household status, you'll need to be unmarried on the last day of the tax year. You also need to contribute more than 50 percent toward the financial support of your home, and your children has to live with you for more than six months of the year. TurboTax can help you determine if you qualify for head of household status.
Establish qualifying dependents
There are conditions that determine if you can claim your child as a dependent. The Internal Revenue Service uses the custodial residency test, in most cases, to determine if you can claim your child as a dependent. However, if there’s a non-custodial parent, they can be granted the right to claim your child as a dependent if all these conditions apply:
- You and your child’s other parent, whether married or not, lived apart for the last six months or are legally divorced or separated.
- The child received at least half of his support from the parents for at least half of the year.
- You and/or the child's other parent have legal custody of him.
- Either you provide a written waiver to not claim the child as your dependent or a pre-1984 legal agreement exists that allows the non-custodial parent to claim the child as a dependent.
Claim the dependent exemption or dependent credit
For tax years prior to 2018, the IRS allows a tax exemption to reduce the burden of caring for a child. “This can be a big plus for single moms,” advises Bill Symons, president of Computer Accounting Systems in Oswego, N.Y. “Claiming an exemption for each child can greatly reduce a single mom’s taxable income and in some cases, depending on her tax bracket, give her a bigger tax refund.” However, once a single mother’s adjusted gross income exceeds a certain amount, the deduction is phased out.
Beginning in 2018, dependent exemptions are no longer available and have been replaced by a higher standard deduction and higher child tax credit (see below).
Claim the child tax credit
If you're doing your 2023 taxes, here's what you should know about the Additional Child Tax Credit
A single mom making less than $200,000, can claim a $2,000 child tax credit for each child for single or head of household filers. The credit amount comes off your tax bill. If you owe less than the child tax credit, you’ll receive some or all as a refund. To qualify, the child needs to:
- Be 16 years old or younger and be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, grandchild, niece, nephew or a legally adopted child
- Have lived with you for more than six months
- Be a United States citizen, U.S. national or U.S. resident alien
- Be your dependent
- Have received more than half of their support from you
Up to $1,500 of the Child Tax Credit is refundable for 2023 through the Additional Child Tax Credit for qualifying families.
If your dependent child does not qualify for the child tax credit, perhaps due to their age, you can still likely claim the lesser other dependent credit instead.
TurboTax Tip: If your dependent child is 12 years old or younger, and you pay for daycare while you work or look for work, you may be eligible for the Child and Dependent Care Credit worth up to 35% of child-care expenses of up to $3,000 for one child and $6,000 for two or more.
Stimulus impact on the Child Tax Credit and on the Additional Child Tax Credit for 2021
Advance Child Tax Credit Payments
The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March of 2021. Most families did not need to do anything to get their advance payment. Normally, the IRS calculated the payment amount based on your 2020 tax return. Eligible families received advance payments, either by direct deposit or check.
These payments were an advance of your 2021 Child Tax Credit. The amount that you received will need to be reconciled to the amount that you are eligible for when you prepare your 2021 tax return in 2022. Most families will receive about one-half of their tax credit through the advance payments. If you receive too little, you will be due an additional amount on your tax return. In the unlikely event that you receive too much, you might have to pay the excess back, depending on your income level.
Child Tax Credit Changes
The American Rescue Plan raised the maximum 2021 Child Tax Credit to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not eligible for the credit.
The Child Tax Credit changes for 2021 have lower income limits than the original Child Tax Credit. Families that do not qualify for the credit using these income limits are still eligible for the $2,000 per child credit using the original Child Tax Credit income and phase-out amounts.
In addition, the entire credit is fully refundable for 2021 for most filers. This means that eligible families can get it, even if they owe no federal income tax.
Before 2021, the refundable portion was limited to $1,400 per child and there were other requirements regarding earned income to obtain the refundable portion. There is not an earned income requirement for 2021.
For updates and more information, please visit our 2021 Child Tax Credit blog post.
Deduct childcare expenses
If your dependent child is 12 years old or younger, and you pay for daycare while you work or look for work, you may be eligible for the Child and Dependent Care Credit. To qualify you'll need to have earned income, be a full-time student, or be physically or mentally unable to care for yourself. The care provider has to be at least 19 years of age if also your child, can’t be a parent of the qualifying child, and you have to identify them on your tax return. Depending on your income, the credit can be up to 35 percent of childcare costs. Any contributions to childcare expenses from an employer need to be deducted from the total expense.
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