Top 5 Ways Single Moms Can Cut Down Their Taxes

Last Updated on January 31, 2024 by Lori Pace

Did you know that single moms could qualify for tax breaks of up to $18 000 under the head of the household status?

The federal government and other organizations like the American Rescue Plan, provide a number of tax benefits for single moms (it is important that you are aware of these). Some of them are completely refundable. 

If you’re looking to take advantage of these benefits, then you’ve come to the right place. 

When you’re armed with the right knowledge, doing your taxes is less stressful and most importantly, you save money big time.

Top 5 Tips for Tax Breaks for Single Moms

We’ve listed the top 5 tips on how you can qualify for a tax break.

1. File as Head of Household

When you’re filing for your taxes, it is highly recommended that you file as head of household rather than single. Why though? 

Filing as head of household allows you to qualify for greater benefits. 

Firstly, you could claim a higher standard deduction of $18 800 in 2021. Secondly, you can earn more than single filers before moving to the next-higher tax bracket. Remember as you earn more, you have to pay more taxes (so the lower the bracket, the better). Thirdly, this status opens your doors to other tax breaks, including the child tax credit.

To qualify for head of the household status there are a few requirements:

  • You need to be single on the last day of the tax year (this means you haven’t lived with your spouse or you’ve been divorced for the last 6 months of the tax year)
  • You should contribute more than 50% of your household expenses
  • Your children lived with you for more than 6 months of the year

Filing for the head of household can be challenging, but it’s a no-brainer because of the amazing benefits attached to it. 

Do you believe that you qualify for this status? If yes, then you need to get in touch with a tax professional to confirm whether you qualify or not. 

2. Child Tax Credit

Did you know that you could claim a tax credit of $2 000 per child? 

Tax credits reduce your tax bill on a dollar-to-dollar basis. So if you qualify for a child tax credit of $2 000, it means that $2 000 will be cut off your tax bill! That’s a whopping $2 000 you could save!

Tax credits are more beneficial than tax deductions because they are amounts of money that are deducted directly from the tax you owe the IRS. 

So what do you need to qualify for this incredible money-saving opportunity? It’s simple, you just need to have one or more children.

And a few other requirements:

  • You earn less than $200 000 a year
  • Your child/children need to be under 17 years old at the end of the tax year
  • They need to be U.S citizens or foreigners living in the U.S.
  • They need to have lived with you for more than half the year
  • They shouldn’t have contributed towards more than 50% of their own support needs

Hint: You could claim for additional tax credit (and get a refund) if you do not qualify for the full $2 000 per child.

3. Child and Dependent Care Credit

Did you pay someone to look after your child/children when you went to work? Or maybe you sent them to daycare? Then you might be eligible for a tax credit of up to 35%.

Daycare is pretty much a necessity, especially for single moms who need to go to work/school. But the expenses of daycare can prove to be very costly. 

The good news is that the IRS has a tax exemption program in place to help single moms provide proper care for their children at an affordable rate. You could qualify for a tax credit of $3 000 per dependent for child care expenses (yes you can claim a tax credit for more than one child). 

To qualify for this benefit, you need to ensure the following:

  • Your child/children are 12 years old or younger
  • They need to live with you for at least 6 months a year
  • You must pay more than 50% of your household costs
  • You must be the custodial parent of your child/children

For further tax reductions on child care costs, enroll in a Dependent Care FSA

This is a benefit account used to pay for qualifying child care services which include:

These funds are deducted from your paycheck pre-tax and will help lessen your overall tax burden.

4. Earned Income Tax Credit (EITC)

There’s no doubt that the EITC is the credit of all credits…because it’s fully REFUNDABLE! 

Yes, you might be able to get a refund even if you didn’t earn enough to pay taxes because the EITC protects single moms against unstable incomes

Single moms could earn credits of $3 584 per child and up to $6 557 for two children. The catch? Your income limits the credit you are able to qualify for. 

A qualifying child should meet the following requirements:

  • Have a social security number
  • Meet the required age
  • Claimed by one parent

5. Free Tax Return Preparation

Managing your taxes as a single mom can be very stressful and confusing. But to maximize your savings, it’s important to know all the credits you could take advantage of. 

That is when tax professionals step in to assist you in filing your taxes correctly and applying for all the credit you qualify for. 

But isn’t a tax professional costly? 

That doesn’t have to be the case if:

  • You earn $57 000 or less
  • Are disabled 
  • A senior citizen (older than 60 years)
  • NOT a native English speaker

Because you could qualify for the IRS’s Volunteer Income Tax Assistance (VITA) accredited program, where a qualified volunteer will assist you with FREE electronic filing for your basic income tax return. 

VITA assistance is available at community centers, libraries, schools, and shopping malls. To locate your nearest VITA use VITA Locator Tool or call 800-906-9887.

In Conclusion

We hope this article gave you some great ideas to get tax breaks for single moms. However, if you haven’t found what you’re looking for, check out our pages on loans for single mothers or budgeting tips for single moms to help get your finances in order.

Lori Pace
Lori Pace

Lori Pace is a single mother of three daughters ages 7 and under. As a working mom from home, she balances kids, work and two crazy dogs with humor and love. Follow Lori as she honestly gives tips and advice based on her own experiences as a single mom!