As a single mom, raising a child can be challenging both emotionally and financially. However, the government offers tax credits and deductions to help ease the burden. Here are some of the tax breaks available to single mothers that can help reduce their tax liability and provide some relief:
1. Head of Household Filing Status:
Single mothers who provide more than half of the financial support for their child may be eligible to file as Head of Household. This filing status offers a higher standard deduction and lower tax rates than if they filed as Single.
2. Child Tax Credit:
The Child Tax Credit is worth up to $2,000 per qualifying child under the age of 17. To be eligible, the child must have a valid Social Security number and be claimed as a dependent on the mother's tax return. The credit begins to phase out for incomes above $200,000 for single filers.
3. Earned Income Tax Credit (EITC):
The EITC is a credit for low to moderate-income earners. Single mothers who earn less than $41,756 in 2021 and have at least one qualifying child may be eligible for this credit. The credit amount depends on income, filing status, and number of children, but can be worth up to $6,728.
4. Child and Dependent Care Credit:
Single mothers who pay for childcare while they work or look for work may be eligible for the Child and Dependent Care Credit. The credit is worth up to $1,050 for one qualifying child and up to $2,100 for two or more qualifying children. The amount of the credit is based on the amount of money paid for care and the mother's income.
5. Medical Expenses:
Single mothers can deduct medical expenses that exceed 7.5% of their adjusted gross income. This includes expenses related to pregnancy, childbirth, and other medical care for the mother and child.
It is important to note that some of these credits and deductions have income limits, so it is important to consult with a qualified tax professional to determine eligibility and ensure all tax breaks are being taken advantage of.
In conclusion, single mothers can benefit from a variety of tax credits and deductions to help reduce their tax liability and provide financial relief. It is essential to work with a qualified tax expert to ensure that all available tax breaks are being utilized, and to stay up-to-date on changes to tax laws that could impact their tax situation. Contact Accountants Now experts today to help you navigate your tax situation and maximize your savings.