Tax Breaks for Single Parents

Don't Miss Out on Important Tax Savings

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Updated April 09, 2021

Being armed with the right knowledge can help take the stress and guesswork out of filing your taxes as a single parent. Consider researching and taking advantage of some of these possible tax breaks.

File as Head of Household

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Filing as head of household on your tax return has two benefits for single parents: You will pay less in taxes overall and be able to claim a higher standard deduction. The standard deduction for a head of household under 65 filing for the 2020 tax year is $18,650.

Generally, you qualify for head of household status if you were unmarried on the last day of the year, you provided more than 50% of the funds needed to maintain your household, and your children lived with you for more than half the year.

If you have any questions about whether you qualify, you should speak with a reliable tax representative in your area.

Child Tax Credit

A credit is different from an exemption, because it's subtracted from the total amount of taxes you owe, and this can add up to substantial savings. To qualify for the Child Tax Credit, the qualifying child must meet certain requirements set forth by the IRS, including being under the age of 17 on the last day of the year.

The American Rescue Plan Act (ARPA), signed into law on March 11, 2021, increased the size of the Child Tax Credit for 2021 and makes the entire amount refundable, even if it exceeds the amount of taxes you owe. In addition, the credit will be distributed in advance of next year's tax return.

Previously, if the amount of your Child Tax Credit was more than the amount of tax you owed, you would apply to claim the credit, which allowed you to receive a tax refund for the unused portion.

Child Care Credit

If someone else cared for your child so that you could either work or look for work, you may be eligible for a tax credit for your child and dependent care expenses. Your child must have been under the age of 13 for at least part of the year to qualify. The person responsible for taking care of your child cannot be the child's other parent or anyone who can claim you as a dependent.

For the tax year 2021, ARPA also expanded the size of the allowable Child Care Credit, giving parents up to $8,000 per year for two qualified children, or 50% of a maximum $16,000 in care costs.

To be eligible for the child care credit, you must also have earned an income during the year, so if you are a stay-at-home parent or between jobs, you will not qualify to receive the child care credit when you file your taxes.

Earned Income Tax Credit

This credit was designed to help low- and moderate-income working families. Even if you did not earn enough money to owe taxes, you may be eligible for a refund through the Earned Income Tax Credit (EITC).

People whose children do not have Social Security numbers, but are otherwise eligible, can claim the benefit offered to childless households. This was not the case prior to the passing of the ARPA in March 2021.

If you claim the EITC or Additional Child Tax Credit (ACTC) on your tax return, the IRS must hold your refund until at least February 15, even the portion not associated with EITC or ACTC, to verify your eligibility.