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Posted by Dennis Jao

Vital Tax Tips for all Single Mothers

Vital Tax Tips for all Single Mothers

There are many ways you can reduce what you will have to pay to Uncle Sam via tax credits and deductions for single moms filing taxes. You can use various strategies to reduce the entire amount you pay, and in some cases, get refunds even when you paid no taxes.


File as Head of Household 

As a head of household, you get a lower tax rate compared to filing as single or married, alongside a higher standard deduction amount. Qualification for the head of household involves being unmarried as of Dec 31 of the tax year. 

Also, over half of the home support or bill needs to be on you, while your kids need to live under your roof for more than 180 days in a year.


Determining the Dependents that Qualify 

Before claiming your kid as a dependent, there are some conditions to meet. Uncle Sam employs the custodial residency test to determine if you will claim the kid in many cases. In cases when a non-custodial father exists, Uncle Sam can grant the kid the right to claim such kid as dependents provided these entire conditions apply:

  • You and the father of your kid, even if not you are not married, were apart for the last 180 days; you are legally separated.

  • The kid got not less than half of the support from their parents for at least 180 days.

  • You and the kid's father have legal custody of the child

  • You need to provide a written waiver to avoid claiming the kid as your dependent

Claim Such Dependent Credit or Exemption 

For tax years before 2018, Uncle Sam allows tax exemption to bring down the burden of child care. This is a considerable advantage for single mums as all exemptions claimed for each kid can significantly bring down the taxable income. In some cases, depending on the tax credit, it can lead to a bigger tax refund. 

This deduction, however, is phased out once the income (for the single mum) gets to a specific limit. 

Starting from 2018, there are no more dependent exemptions as a more significant standard deduction value replaced them alongside a bigger child tax credit value.


Effect of Stimulus on Your Child Tax Credit and the 2021 Additional Tax Credit

Payment for Advance Child Tax Credit 

The American Rescue Plan Act of March 2021 authorized the new child tax credit. Many families need not do anything to claim and get this credit payment. Ideally, Uncle Sam estimates such payment amounts based on the 2020 tax return. Families that qualify will get the advance payment either by check or direct deposit. 

Such payments are in advance of the Child Tax credit for 2021. Whatever you get will be reconciled to the amount you qualify for on preparing your tax return for 2021 in 2022. Many families will get about half of their tax credit using the advance payments. If you got a small amount, your tax return would have an extra amount for which you will receive. Should you receive too much, which is unlikely, you will have to repay the excess, depending on your income level.


Changes to the Child Tax Credit 

Based on the American Rescue Plan, the 2021 Child Tax Credit has a maximum value of $3,600 for kids that qualify within six years, raised to $3000 for every kid who are between ages 6 and 17. This credit had a value of $2,000 for every qualifying child, and kids aged 17 did not qualify. 

The lower-income limit for the child tax credit in 2021 was lower compared to the original child credit. Some families might not qualify for the credit with these income limits but might be eligible for the $2000 per kid credit when they go through the Child Tax Credit income alongside the phase-out amount. 

Also, the entire amount of such credit is fully refundable in 2021. As a result, families that qualify can get the credit even without owing income tax. 

The refundable portion of the credit before 2021 was limited to $1400 per child, and one needs to meet other requirements concerning earned income to get the refundable amount. 



Dennis Jao
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