Filing taxes as a single parent requires coordination between you and your ex-spouse or partner. Usually the custodial parent claims the child as a dependent, but there are exceptions. A single parent is allowed to claim applicable deductions and exemptions for each qualifying child. Even though you claim your child as a dependent, she may still have to file her own tax return if she has income, such as from an after-school job.
- Determine where the child lives
- Filing as head of household
- The dependent exemption (for tax years prior to 2018)
• If your child lives with you for more than half of the year, even if you’re not the custodial parent, the IRS is likely to grant you the right to claim the child on the tax return.
• You may qualify for a lower tax rate as head of household if you’re unmarried on the last day of the tax year, pay more than 50% of household expenses, and your child lives with you more than six months of the year.
• You may claim the Child Tax Credit worth up to $2,000 per qualifying child (tax year 2023) if your child meets the tests for age, relationship, support, dependent, citizenship, and residence.
• You can claim a credit for a percentage of child-care expenses up to $3,000 for one child and $6,000 for two or more if you meet the requirements of the Child and Dependent Care Credit.
Determine where the child lives
Usually the parent who has custody of the child claims the child on his or her tax return. However, there may be an exception. Where the child spends the majority of his time can be a factor as to which parent can claim the child on their tax return.
- The IRS can disregard the divorce decree or separation agreement when it comes to custody.
- When a child lives with one parent for more than half of the year, even if it's not the custodial parent, the IRS is likely to grant that parent the right to claim the child on the tax return.
- The IRS considers where the child sleeps as a strong determining factor.
Filing as head of household
Choosing to file as head of household usually allows you a higher standard deduction and reduces your taxable income. To qualify for head of household, you must:
- Pay more than 50% of the household expenses;
- Be unmarried on the last day of the tax year, and;
- Have your child live with you for more than six months of the year, except for being at school.
TurboTax can help you determine whether you qualify for head of household status.
The dependent exemption (for tax years prior to 2018)
The IRS allows an exemption for each of your qualifying children until they reach 19 years old, or 24 if a full-time student for at least 5 months of the year, or any age if they are permanently and totally disabled at any time during the year. This amount is subtracted from your adjusted gross income, helping to reduce the amount of tax you pay.
To claim the exemption, the child must be your daughter or son, stepchild, foster child or legally adopted child at the end of the tax year. You can’t claim the exemption, however, if the child provided more than half of her own support for the year.
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).
Claiming the child tax credit
Child Tax Credit for 2023
For tax years prior to 2018, if you file as non-married head of household making less than $75,000 in the tax year, you might also be eligible to claim the child tax credit. This credit can decrease your taxes by $1,000 per qualifying child. If there is a remaining credit balance left over after subtracting the credit from your income taxes, you can get that back as a tax refund.
For tax years 2018 through 2020, and 2022 through 2023, the child tax credit is increased to $2,000 for qualifying children and you can make up to $200,000 as a single or head of household filer before the credit begins to be limited. For 2023, up to $1,500 of the credit is refundable even if you don't owe any tax.
To qualify for the credit, your child will need to meet six tests: age, relationship, support, dependent, citizenship, and residence.
TurboTax Tip: When both parents claim a child on an electronically filed tax return, the second return (the one filed later) will be rejected. If you believe you have the right to claim the child (according to the dependent tax rules), you can dispute this.
Stimulus impact on the Child Tax Credit for 2021
Child Tax Credit Changes
The American Rescue Plan raised the maximum Child Tax Credit in 2021 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 the revised 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. This means that eligible families can get it, even if they owe no federal income tax.
New, Temporary Advance Child Tax Credit Payments
The Child Tax Credit has been expanded by the American Rescue Plan Act, that was enacted in March of 2021. Part of this expansion is to advance the 2021 tax credit to families by sending them direct payments during 2021 rather than having them wait until they prepare their 2021 taxes in 2022. Most families do not need to do anything to get their advance payment. Normally, the IRS will calculate the payment amount based on your 2020 tax return. Eligible families will receive advance payments, either by direct deposit or check.
The amount that you receive will be reconciled to the amount that you are eligible for when you prepare your 2021. 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.
For updates and more information, please visit our 2021 Child Tax Credit blog post.
Include the dependent care credit
The IRS allows single parents to claim a percentage of child care expenses paid that allow them to work outside the home or look for work with the Child and Dependent Care Credit. Child care expenses can be claimed for children 12 years and younger.
For 2023, the amount allowed is up to $3,000 for one child and $6,000 for two or more children.
- The amount of qualifying expenses increases from $3,000 to $8,000 for one qualifying person and from $6,000 to $16,000 for two or more qualifying individuals
- The percentage of qualifying expenses eligible for the credit increases from 35% to 50%
- The beginning of the reduction of the credit is increased from $15,000 to $125,000 of adjusted gross income (AGI).
Also for tax year 2021, the maximum amount that can be contributed to a dependent care flexible spending account and the amount of tax-free employer-provided dependent care benefits is increased from $5,000 to $10,500.
When both parents claim the same child
Divorced parents should communicate clearly in advance of tax season to establish who will claim the child or children. In the event of a dispute where the child’s overnights are split evenly between the parents, the IRS will award the dependent deduction to the parent with the higher AGI (adjusted gross income).
When both parents claim a child on an electronically filed tax return, the second return will be rejected (the one filed later) as the child’s social security number will have already been used on a return. If, however, you believe you have the right to claim the child (according to the dependent tax rules), you can dispute this.
Here are the steps:
- File a paper return instead of e-filing it. You can continue to prepare it online, but you will need to print it and mail it instead at the end.
- Include a letter explaining the situation, along with evidence (like school registration and medical records), proving that you have the right to claim the dependent(s).
- The IRS will review both returns, contact both of you by mail for further proof if necessary, and then decide which person can claim the dependent(s) based on current tax law.
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