Whether a single parent to a toddler or a teen, there are often significant tax benefits available to those who can claim dependents. Knowing which tax benefits exist—and understanding what determines who is allowed to claim a child based on tax law—may help single moms and dads receive more money back on their 2009 tax return.
For parents who are divorced or separated, remember that only one parent is allowed to claim a child on a tax return as a dependent. Typically it is the “custodial parent” or the parent the child resides with the greater number of nights during the year who claims the child on his/her tax return, though the custodial parent can allow the non-custodial parent to claim the child if certain conditions are met. If the child lived with each parent for an equal number of nights during the year, the parent with the higher adjusted gross income becomes the custodial parent.
Many single taxpayers with dependent children may file as Head of Household, if the following conditions are met:
- You are unmarried or “considered unmarried” on the last day of the year
- You paid more than half the cost of keeping up a home for the year
- You had a “qualifying dependent” living with you in your home for more than half the year
The Head of Household tax rate is usually lower than that of those filing as single or married filing separately, and the standard deduction is also higher by choosing the status.
Because the IRS considers marriage status based on the last day of the tax year, taxpayers who are separated or in the process of getting divorced may still be able to file as Head of Household even if the divorce is not yet final as of midnight on December 31. In order to be “considered unmarried,” the spouses must have lived apart in separate households for the last six months of the year, must have a dependent child living with them for more than six months, and must not file a joint tax return this year.
Taxpayers may also claim a range of credits, including the Earned Income Tax Credit, Child and Dependent Care Credit, Education Credit, and deduct the child’s medical expenses they paid when they are the custodial parent of a qualifying child. Non-custodial parents, who claim the child, may claim the Child Tax and Additional Child Tax Credit and can deduct the child’s medical expenses they paid.
If you need to find out more about the tax implications of being a single parent, contact your local Jackson Hewitt® office.