Focus on Family: Tax time tips for single moms and caregivers

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David Prokupek

5 Overlooked Tax Benefits For Single Moms:

Many single moms don’t realize they can use the Head of Household filing status instead of Single.  Head of Household standard deduction and tax rate schedule are the second lowest after Married Filing Jointly and Qualifying Widow.  Higher standard deduction amount means less income is subject to taxes, and a lower tax rate means less taxes.  Lower taxes equals a higher refund

Daycare is expensive and as a single parent one of your highest priorities.  There is a tax break for all or part of your taxes though.  First, use your company’s daycare flex spending account.  This account allows you to use up to $5,000 a year of your income before taxes to pay for your daycare.  Then you can use any remaining expense, up to $6,000 total spent, for a tax credit when you have more than two children in daycare.  This is a total win-win when it comes to reducing your taxes and taking care of your most precious commodity.

Let’s not forget the Child Tax Credits.  If your dependent child is under 17, you can get a $1,000 tax credit for each child.  In many cases, any credit left after taxes are reduced to zero are used to increase your refund.  More money back to you at the end of the year!

One of the biggest tax benefits for single moms is to let dad claim the dependent.  You can still claim the Head of Household filing status, and the childcare benefits and earned income tax credit when you qualify.  This is a great way to ease the disagreements about claiming the dependents when filing your taxes and still gives you some big tax breaks and the earned income tax credit can give you a bigger refund at tax time.

Don’t forget that child support isn’t taxable and doesn’t affect your earned income tax credit.

Top Overlooked Tax Benefits for Caregivers:

You can claim a credit for the expenses of summer day camp.  As long as your child isn’t staying overnight and the purpose of the camp is to provide care for your child while you work don’t forget one of your most expensive costs for your school-age children.

You can claim a credit for the cost of daycare while you work for your dependent parent or other relative.  As long as the care is necessary because the dependent can’t take care of themselves, the cost are eligible.

Any cost of home health care beyond those allowed for the daycare credit can be claimed as medical expenses.  If the caregiver is needed for medical care, you can claim the expenses.

The costs of upgrading your home to accommodate a dependent who has special medical needs, such as wheelchair ramps, special shower entrances, sinks and even safety bars can be a medical expense.

Make sure you keep receipts for medical supplies such as hearing aid batteries, insulin and associated supplies, even new parts for walkers, wheelchairs and scooters.  These expenses are deductible.

Getting Ready:

Gather your receipts from your expenses throughout the year. In the day to day trials of being a caregiver, we forget about the little expenses that add up.

Check your calendar for all your trips to the doctor, pharmacy, medical supply store, hospital, therapy, treatment centers, etc.  How many miles did you drive?  You can claim 23.5 cents a mile for these miles and they add up.

Did you make changes to your home to accommodate the needs of your family member?  Find out the value of your home before and after these changes.  Once you have the increase in value due to the changes, you can more easily track the deductible cost of these changes.

Make sure you have all of your income statements such as W-2s and 1099s; gather cancelled checks or other receipts for support of charitable donations, medical expenses, school expenses, daycare, mortgage interest and real estate taxes,

Find last year’s tax return.  Use it as a checklist for information this year and have it with you when completing this year’s taxes.  Your prior return is a valuable tool to help make sure you remember all the parts of your tax health.

Jackson Hewitt

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