Tax time can be particularly strenuous for single parents. There are certain considerations you have to make to avoid mistakes that could lead to penalties and even problems with your future tax filing. To help you get through the tax season, here are just a few steps you need to take before filing.
Determine Who Is Claiming the Child
Even if you are the custodial parent, there is a possibility that the non-custodial parent can claim the child on his or her tax return. If your child has spent a majority of the past year with his or her other parent, your right to claim the child could be in jeopardy. To the Internal Revenue Service, who has had the main responsibility for physically caring for the child can sometimes trump a court order.
If you have the right to claim your child, ensure the non-custodial parent is aware of this. If he or she files his or her taxes before you do and claims your child, you will be unable to file electronically. Your child's Social Security number will be already in the IRS's system as being claimed as a dependent. You will need to mail your return instead. If you wait until the last minute to file your taxes, you could be caught off-guard by and be forced to pay a late filing penalty.
Take Advantage of Every Credit
Your taxable income could leave you with a large tax bill at the end of year. However, credits can help to reduce your taxes and even result in you receiving a refund. If you do not take advantage of every credit that is available to single parents, you could essentially be leaving money with the federal government that is rightfully yours.
You likely are aware of the Earned Income Tax Credit, which is a special credit for low-income working families. To qualify for the credit you have to meet an income requirement. Your tax management accountant can determine if you do.
There are other credits though that are sometimes overlooked that could be beneficial to single parents. For instance, the child tax credit is avialable to parents who have children under the age of 17 who they supported for more than half the year.
Your accountant can help with identifying other ways you can reduce your tax bill and get a refund when you file taxes. He or she can even help you identify ways you can work throughout the year to lower your taxes for the next year.