Unmarried moms face a unique set of concerns in life, and that includes taxes. Before filing, single moms should consider these federal tax considerations:
Head of household status. If you were unmarried on Dec. 31, 2014, earn at least 50 percent of your household income and your kids live with you for 6 months of the year or more total, file as head of household. This usually affords you a lower tax rate and higher deductions.
Determine who you can claim as a dependent. This determines whither you can take any number of other credits and deductions. This is usually stipulated in a separation or divorce agreement, and the parent who would normally claim the child can agree to sign a waiver allowing a non-custodial parent to make the claim. You cannot split this deduction for a single child, but some parents agree to take turns claiming children on alternate years, or if there are two or more children, agreeing that each parent can claim one of the kids. However, the IRS determines that a child is a dependent based on if the child lived with a parent for at least six months and was financially supported for the same time.
Happy mother and little son in the kitchen, happy time and togetherness
Exemptions. For every dependent kid, you can deduct $3,950 for tax year 2014. This phases out for heads of household earning $279,650 or more.
Tax credits. Single parents earning $75,000 adjusted gross income or less can take $1,000 off their tax bill for each dependent kid who was aged 16 and younger on Dec. 31.
Child care. Heads of household who have an income or are full-time students can claim u p to $3,000 for one kid or $6,000 for two or more children for qualifying child care. This includes summer day camps and after-school programs. Phaseout starts at $75,000 for single head of household filers.
Dependent care spending accounts. If this tax-sheltering benefit is available through your employer or business, single heads of household can contribute up to $5,000 tax-free to pay for child care expenses for dependent children.
Earned Income Tax Credit If you have three or more kids and earned less than $46,997 as a single parent, take this credit. If you have one or two children you may also qualify if your income is lower. The maximum credit is $6,143.
Adoption costs. If you adopted a child and the process was finalized in 2014, you are eligible for up to $13,190 per child in federal tax credits.