Tax Breaks Every Single Mother Should Know

Updated June 12, 2019

For millions of American families — especially those headed by single women, tax season is full of stress and number crunching. However, at tax time, being a parent comes with certain perks.

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For millions of American families — especially those headed by single women, tax season is full of stress and number crunching.

There are, however, some useful tax credits that can significantly lower the amount of taxes to pay. And, in some cases, give cash refunds to families in jobs that pay too little to live on.

Claiming a tax credit is like putting money back in your pocket, and for single mother, this can make a real difference to the bottom line.

In fact, at tax time, being a parent comes with certain perks.

For example, as for tax year 2018, eligible single mom of two could claim up to $5,716 in EITC, up to $4,000 in Child Tax Credit, plus as much as $6,000 spent on care expenses.


Personal & Dependent Exemption

  • Personal exemption has been suspended.

    One of the most common tax deductions for single mothers is the dependent exemption — $4,050 for each child until your child turns 19, or 24 if he’s a full time student.1

    What’s especially nice is that you can take one exemption for yourself to cover your basic living expenses, that’s $4,050 off your taxable income.

    So if you are a mother with two qualifying children, you can deduct $4,050 for each exemption you claim on your tax return. That’s a total of $12,150 by which you may be able to reduce your taxable income.

The Tax Cuts and Jobs Act of 2018 has suspended all personal and dependent exemptions for tax years 2018—2025. For the 2018 tax year and beyond, you can no longer claim a personal exemption for yourself, your spouse, or your dependents.2

Filing Taxes as a “Head of the Household”

As a single mother and the sole breadwinner in the family, the first thing you must do is to select “Head of the Household” as your filing status. Filing as “Head of Household” has two benefits. First, you’ll pay less taxes overall; and second, you’ll also be able to claim a larger tax exemption.

Filing Status2018
Single or Married Filing Separately$12,000
Head of Household$18,000
Married Filing Jointly or Qualifying Widow(er)$24,000

What is the head of household deduction for 2018?

For tax year 2018, taxpayers who use the head of household filing status may receive an $18,000 annual standard deduction. In comparison, a single filer is only entitled to a $12,000 standard deduction. 3

Earned Income Tax Credit

EITC, the Earned Income Tax Credit is a tax benefit designed primarily to help low- to moderate-income individuals and families whose earned income falls below a certain limit.

It isn’t a welfare handout per se. Only people who work and pay taxes can claim it; creating an incentive for them, including many who are poor, to leave welfare for work.4

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The EITC is “refundable,” which means that when EITC exceeds the amount of taxes owed, it results in a tax refund, whose amount varies by income, family size and filing status.5

For example, if your tax liability is only $2,431 and the credit you are allowed is $6,431, you may receive a refund check for $4,000 from the IRS.


EITC FAQ

  • What is the maximum income to qualify for earned income credit 2018?
    NO. of CHILDRENMAXIMUM CREDITSINGLEMARRIED
    None$519$15,270$20,950
    1$3,461$40,320$46,010
    2$5,716$45,802$51,492
    3 or more$6,431$49,194$54,884
  • How much is the EIC for 2018?

    Single parents with two children under age 19 who made less than $45,800 are eligible for a refundable credit of up to $5,716. In contrast, couples with no dependent children earning less than $20,950 can receive no more than $519.

  • How long does it take to get my tax refund?

    In general, the IRS will process your refunds and issue payments within 21 days. For paper filers, this can take much longer. However, the PATH Act, passed in 2015, stipulates that the IRS must withhold refunds until February 15.

    So if you file before February 15, you’re owed a tax refund and you’re claiming either the ACTC or EITC, your entire refund will be withheld until at least the February 15 deadline.


    The IRS has eliminated the guesswork of waiting for your tax refund by creating IRS2Go, an app that allows you to track the status of your return. You can also check the status of your refund with the Where’s My Refund? online portal.
  • Which states have EITC?

    Twenty six [26] states and the District of Columbia, as well as New York City, offer their own version of Earned Income Tax Credits to complement the federal credits — applying a percentage match to the federal allocation.

Child Tax Credit


If your child or children under the age of 17, claimed as dependents and are US citizens with Social Security number, there is a good chance you qualify for the Child Tax Credit.

For tax years after 2017, the Child Tax Credit increases to $2,000 per eligible child with up to $1,400 of it being refundable.6 There is no longer an Additional Child Tax Credit separate from the Child Tax Credit.

The credit will gradually decreases, based on your income for the year, starting from $2,500 until it reaches a threshold of $200,000 or $400,000 if married filing jointly.

Families whose credit exceeds their tax liability can receive the remainder of the credit in the form of a refund not exceeding 15% of their earnings above $2,500; this refund can be worth up to $1,400 per child.

For example, a single mother with two children who earns $14,000 could receive 15% of $11,500, or $1,725, as a refund7 but no more than $2,800.

  • Other Dependents Credit

    The CTC also includes a $500 non-refundable credit for families with qualifying non-child dependents. This credit is available for each dependent who does not qualify for the CTC, covering those without Social Security number or over age 17.

  • Additional Child Tax Credit

    The Additional Child Tax Credit (ACTC) is a refundable credit that you may receive if your Child Tax Credit is greater than the total amount of income taxes you owe, as long as you had an earned income of at least $2,500.


    What is the Additional Child Tax Credit for 2018?

    For 2018 returns, the ACTC, which becomes the refundable portion of the Child Tax Credit, is worth up to $1,400 for each eligible child.

  • Child and Dependent Care Credit

    Paid a local daycare center to take care of your kid? Did you pay someone to care for your child so that you could work or look for work? If you did, you might be eligible for the child and dependent care credit.

    This credit “gives back” a portion of the money you spend on care up to $3,000 of expenses paid in a year for one qualifying child under 13 or $6,000 max per family. Eligible expenses include the cost of a nanny, preschool, before- or after-school care and summer day camp.

    This works best when you file as a “Head of Household”, and can cut your taxes by up to 35% of what you’ve paid for the service. The exact percentage is determined by your income level.

    To claim child and dependent care credit, complete and attach Form 2441 to your return. You must file taxes using either Form 1040 or Form 1040A to claim the credit.

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Education Tax Benefits


There are two (2) tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American Opportunity Credit and the Lifetime Learning Credit.

If you are eligible for both the American Opportunity Credit and the Lifetime Learning Credit, you can choose to claim either credit, but not both.

  • American Opportunity Tax Credit

    The American Opportunity Credit is a tax credit of up to $2,500 of the cost of tuition, fees and course materials, which can be claimed for expenses for the first four (4) years of post-secondary education.8

    Benefit Amount $2,500 tax credit per student9
    100% of first $2,000, 25% of second $2,000
    Limit: First 4 years of post-secondary education
    Income Phaseout $80,000 to $90,000 (single)
    $160,000 to $180,000 (joint)
  • Lifetime Learning Tax Credit

    Unlike the American Opportunity Credit10, the Lifetime Learning Credit is “non-refundable” so the maximum credit is limited to the amount of tax you owe. There is, however, no limit on the number of years for which you can claim a Lifetime Learning Credit.

    Benefit Amount $2,000 tax credit per student11
    20% of first $10,000
    Unlimited number of years
    Income Phaseout $54,000 to $64,000 (single)
    $108,000 to $128,000 (joint)
  • Student Loan Interest Deduction

    You’re allowed a tax deduction of up to $2,500 per year for the interest paid on qualified student loans, including private student loans that you took out for yourself, your dependent or your spouse.


    Can you still claim student loan interest on taxes in 2018?
    Yes. The most student loan interest you can claim as a tax deduction is limited to $2,500 as of the 2018 tax year.


    What is the income limit for student loan interest deduction 2018?
    The limit of the amount of income you can make and still qualify for the student loan interest deduction, based on your filing status, for the 2018 tax year is $80,000 if single or $165,000 if married filing jointly.


    Can a co-signer deduct student loan interest?
    Yes, a parent who co-signed student loans may claim the student loan interest deduction too as long as the student is a dependent of the co-signer.


    What is IRS Form 1098-E?
    IRS Form 1098-E is the Student Loan Interest Statement that your federal loan servicer will use to report student loan interest payments to both the Internal Revenue Service (IRS) and to you.

No matter what your tax status is, take a little time to make sure that you’re taking advantage of all the benefits available to you — especially if this is the first time you’ll be doing your taxes as a single mother.

If you can afford it, it might even be worth spending a little money to seek advice from a professional tax consultant to make sure you are not missing out on a refundable tax credit worth up to nearly $6,000.


Get Help with Your Taxes

  • Interactive Tax Assistant

    If you have tax questions, you should check out the Interactive Tax Assistant on IRS.gov. This tool provides answers to a number of tax questions. It can help determine if a type of income is taxable, if you’re eligible to claim certain credits, and if you can deduct expenses on your tax return.

  • Volunteer Income Tax Assistance (VITA)

    The IRS offers free tax preparation through a program called Volunteer Income Tax Assistance (VITA). These sites are usually open from the end of January through April 15.

    In addition to VITA, the Tax Counseling for the Elderly (TCE) program also offers free tax help for all taxpayers, particularly those who are 60 and older, specializing in questions about pensions and retirement-related issues unique to seniors.

    To locate the nearest VITA or TCE site near you, call
    800-906-9887

  • Low-Income Taxpayer Clinic

    Funded by the IRS, Low Income Taxpayer Clinics (LITCs) represent low income individuals in disputes with the IRS — for free or for a small fee, including audits, appeals, collection matters, and federal tax litigation.

    No application is needed to utilize this service. Each LITC will determine if you meet the income guidelines and other criteria before it will agree to represent you.

    If you believe you’re eligible — and in need of help with tax matters, find the clinic nearest you12 and call the numbers listed on the list for an appointment.

References
  1. IRS, Publication 17, Personal Exemptions and Dependents
  2. At the time this writing, Congress was considering legislation that would do the following.
  3. IRS, Publication 501, Exemptions, Standard Deduction, and Filing Information
  4. Center on Budget and Policy Priorities, Policy Basics: The Earned Income Tax Credit
  5. Use the EITC Assistant to find out if you qualify.
  6. The Tax Cuts and Jobs Act of 2018 doubled the CTC for children under 17 from $1,000 per child to $2,000 per child, up to $1,400 of which families can receive as a refundable credit.
  7. CBPP, Policy Basics: The Child Tax Credit
  8. IRS, Chapter 2, Publication 970, Earned
  9. IRS, Publication 970, Tax Benefits for Education, Table 2-1
  10. Up to $1,000 of the credit can be refunded if your credit is more than you owe in taxes.
  11. IRS, Publication 970, Tax Benefits for Education, Table 3-1
  12. Low Income Taxpayer Clinic List
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