A Guide to Tax Credits for Single Parents

Posted on May 2 2012 - 3:53am by admin

How do you give the government less of your hard earned money? It is the question of every tax season. Single parents, more than most, need all the savings they can come by because they have all the same expenses as a two parent family but only have one income.  Where can single parents find the saving they need? Tax credits are one place to look to help save money.


What are Tax Credits

A tax credit is an amount of money that is subtracted from the taxes you owe to the government. By using tax credits you can reduce the amount of taxes you owe to zero. However, you cannot use tax credits, most of the time, to receive money from the government. This is because most tax credits are non-refundable. So, when your taxes reach zero your left over tax credits either disappear or can be saved to use another year. There are two refundable tax credits, the Additional Child Tax Credit and the Earned Income Tax Credit. Even after your taxes have reached zero you can use these two tax credits to get a refund from the government.

Can a Single Parent Qualify for Tax Credits?

The question is not are there any tax credits for single parents but what tax credits can single parents take advantage of? Unlike the Irish government, the US government has yet to set up any Tax Credits specifically for single parent families. However, there are four tax credits specifically aimed at families. These are the Child Tax Credit, the Child and Dependent Care Credit, the Adoption Tax Credit, and the Earned Income Tax Credit.


Child Tax Credit

The Child Tax Credit is the most straight forward of the four tax credits in this article. This tax credit gives parents up to $ 1,000 for each child under the age of 17. However, the child must be your dependent and there are income limitations. An income limitation is an amount of money your income cannot exceed or the credit will be reduced. The income limitations are as follows


Income Limitations for the Child Tax Credit

  • $55,000 for married couples filing separately
  • $75,000 for single, head of household or qualifying widowers
  • $110,000 for married couples filing jointly

If you exceed the above limitations then for every $1000 you go over the income limitation is decreased by $50.


Information on the Additional Child Tax Credit

Excess Child Tax Credits can be refunded, which is known as the Additional Child Tax Credit. How much you are refunded is based on how many children you claim on your taxes. If you claim one or two children then you will either receive the unused credits or 15% of your earned income over $3,000, whichever is smaller. If you claim three or more children then you will receive 15% of your earned income over $3,000 or your total Medicare and Social Security taxes minus the Earned Income Credit, whichever is bigger.

How to Apply

In order to apply for this credit you need to use Form 1040, 1040A, or 1040NR.

For the Additional Child Tax Credit you need to fill out Form 8812: http://www.irs.gov/pub/irs-pdf/f8812.pdf

For more information visit: http://www.irs.gov/publications/p972/index.html


Child and Dependent Care Credit

The Child and Dependent Care Credit is to help with expenses paid to a care provider while parents are working or looking for work. The care provider does need to meet certain qualification. For example, he/she must be older than 18 and cannot be your dependent.

When claiming money for this tax credit you need to subtract any money your employer has given you through a Dependents Care Benefits Plan. The tax credit ranges between $3,000 maximum for one child/dependent and $6,000 maximum for multiple children/dependents.  Overall the credit should be worth 20 – 35% of your care expenses.

Any children or dependents you claim must be under the age of 13 or be physically or mentally unable to care for themselves. They must also have lived with you for more than half the year. Exceptions will be made for extraordinary circumstances.

How to Apply

If you are applying for this credit you cannot use Form 1040EZ and you must complete Form 2441: http://www.irs.gov/pub/irs-pdf/f2441.pdf

On Form 2441 you are required to provide your care providers name, business name if there is one, address, and either their Social Security Number or their Employer Identification Number.


For more information visit: http://www.irs.gov/publications/p503/index.html

Adoption Tax Credit

The Adoption tax credit was set up to help parents who have adopted a child to offset their adoption expenses. Unlike other tax credits this credit is only good once per child rather than being a yearly tax credit. Another difference from other tax credits is this tax credit is both a credit and exclusion. An exclusion in this case being an amount of money you have been given that must be reported but is not taxed. This means any money your employer, a government agency, or any other organization has given you to help with your adoption is not taxed.  However, only money paid out of your own pocket is eligible for the tax credit.

For the child you are adopting to be eligible he/she needs to be younger than 18 or a US citizen/resident who is mentally/physically incapable of caring for themselves. There is no restriction on adopting a child from another country. However you do not qualify if you are adopting a step-child. If the child has special needs you are able to claim the full worth of the Credit even if it exceeds your adoption expenses. For the 2011 tax year the credit is worth $13,360 per child. However, currently the Credit is scheduled to be scaled back.

If you have adopted a child and they do not yet have a Social Security Number then you need to apply for an Adoption Tax Id Number.


How to Apply

To apply for this Tax Credit you must fill out Form 8839: http://www.irs.gov/pub/irs-pdf/f8839.pdf

For more information visit: http://www.irs.gov/taxtopics/tc607.html

Earned Income Tax Credit

The Earned Income Tax Credit is for low to moderate income families.  Earned income includes all salaries, and wages you have earned in the past year. This tax credit has income limitations that are based on both you earned income and your adjusted gross income. These income limitations are also adjusted for the number of children you are supporting.


2012 Income Limitations

  • For no qualifying children the limitation is $13, 980
  • For 1 qualifying child the limitation is $36,920
  • For 2 qualifying children the limitation is $41,952
  • For 3 or more qualifying children the limitation is $45,060

*these limitations are increased if you file your taxes as married filing jointly.


Claiming Children

This tax credit is adjusted based on the number of children you claim. Currently you can claim more than three children. However, in 2013 you will only be able to claim two children. For children to be eligible they need to meet four criteria: age, residency, relationship, and joint filing.


Information on the Four Criteria


To meet the age criteria your child must be 18 or younger, or if the dependent is a full time student 23 or younger, or if the dependent is permanently disabled age does not matter.


To meet the relationship criteria your child needs to be related to you by birth, marriage, adoption, or a foster relationship (either the child has been officially placed with you or is an extended family member).



To meet the residency requirement your child needs to have lived with you for more than six months. There are exceptions made for extraordinary circumstances.

Joint Filing

To meet the joint filing criteria your child you are cannot file jointly with a spouse. Unless, they are filing solely to claim a refund.

A married couple filing separately is not eligible for this tax credit. However, if you are separated and have been for more than six months then you can file your taxes as Head of Household and possibly be eligible.


To determine your eligibility

The IRS has set up a tool that will help you determine if you and your dependents are eligible for this tax credit. It can be found here: http://www.irs.gov/individuals/article/0%2C%2Cid%3D130102%2C00.html


How to Apply

To apply for this credit fill out line 64 a) and b) on Form 1040 or line 38 a) and b) on Form 1040A. To claim children you need to fill out Schedule EIC, which can be found here: http://www.irs.gov/pub/irs-pdf/f1040sei.pdf

For more information visit: http://www.irs.gov/individuals/article/0,,id=96406,00.html


When it comes to saving money on taxes, single parents need to look at the same tax credits two parents families look at. The Child Tax Credit, the Child and Dependent Care Tax Credit and the Earned Income Tax Credit all can help families save on their taxes. If you have an adopted child the Adoption Tax Credit can help your family as well. For even though the US government has not set up any tax credit specific to single parents, single parents can take advantage of tax credits all ready available.