How To Get a Financial Boost at Tax Time
When tax time rolls around, many people are worried about whether they will have to pay even more of their hard-earned money. Single moms who need a financial boost shouldn’t have to worry about that, because if they fall in a lower income bracket, there are many things they can take advantage of that will not only give them a tax return, but will increase the amount of money they get back. Before you file taxes, keep in mind these tax breaks:
File as the Head of Household. If you were single on the last day of the year, if your children lived with you for the majority of the year, and if you contributed 50% or more to the household expenses and children’s needs, then you qualify as head of household. This allows you to take a higher standard deduction, and also means you pay slightly less in taxes than someone who is not the head of household.
Each qualifying child is an exemption, but keep in mind that only one parent can claim a child. Therefore, if you have joint custody, one would claim the child during the first year, then the other during the second year. In 2009 the basic exemption was 3500, which means the first 3500 dollars of your income would not be taxed. The more dependents you have, the more money you can potentially get back in a refund.
Each child under the age of 18 allows you to earn a child tax credit of 1,000 dollars, which is taken away from the amount of taxes you owe. The child tax credit is now standard on most tax-reporting forms, and the only thing you need to claim it is to declare your dependents.
The earned income tax credit was designed to give working families a break at tax time by giving a refund on a sliding scale, based on how much money a person makes. If you made too much money, you won’t qualify — but even if you made too little to owe taxes, you might still qualify for the earned income credit. The only way to know for sure is to check the IRS website (http://www.irs.gov/) or talk to a tax professional.
The child care credit is for those who have paid someone else to watch their children while they worked throughout the year. It applies to children who are under the age of 13, and you must have made some income during the year to qualify for it.
If you think you might qualify for any of these — and virtually all single moms do — then talk to your tax professional about what your next steps should be.