taxes.jpgThere are a growing number of single parent households being created yearly. Whether it is due to death or divorce, the impact of raising children on a single income can be dramatic. In order to help single parents with the task of raising children, the Federal government tries to subsidize low-income families with children through various tax breaks and programs. Here are some that might benefit you when you are looking to save a few bucks.

Flex Credits

If you are working, you may qualify for your company’s flex credit program. This program is a benefit to people with dependents and additional health care costs that need to be paid out of pocket. You can also use the monies in these accounts to help pay for childcare when you are working.

The way it works is that a set amount of money is subtracted from your paycheck on a pre-tax basis. You get to pick the amount based on how much you think you will claim during the year on dependent care or health expenses. This will save you the same amount of money as your tax bracket. If your tax bracket is 15% and you put aside $300/month, you will actually be saving $440/year on these necessities. The only thing you must remember is to make the claims on a timely basis, with the appropriate document required, and to claim all the funds before the end of the year. If you do not claim all the funds, they are not refunded and disappear.

Earned Income Credit

If you are a low-income wage earner, you may qualify for the earned income credit. You have to fill out the EIC schedule during tax time to claim the earned income credit, which can mean thousands of extra dollars in your refund.

Claim Your Dependents

When you are divorcing, if you are the custodial parent, then you want to get the write-off for the dependent in writing in your separation agreement. Over the years, being able to claim a dependent in your tax forms is an easy deduction that should be yours anyways, if the kids live with you most of the time. While alimony is taxable, child support is not taxable income. You will need to check with a tax professional if the terms of your divorce are vague as to who gets to take the dependent care deductions and how to file your alimony income from a divorce.

Are You Head of Household Now?

If you are used to filing a joint married tax return, you may be surprised to find yourself in a new category. Many single parents qualify as a head of household and this can bring significant cuts to the amount of tax owed. The tax tables are much easier on a head of household single parent than they are on an individual filing as a single or a married person filing jointly. Look up the IRS rules to make sure you can now file under head of household. You may have to wait a period of time after the separation to begin filing as head of household until you are legally divorced. You will also need to meet other restrictions like not being a nonresident alien and certain residency requirements.

File On Time

The penalties for not filing on time can be stiff. There’s no reason to not file on time, even if you owe money. You can get a cash loan to help you pay any filing or tax preparation fees to make sure that your taxes are done and that you are getting the best refund you can get. Don’t ever choose to get an immediate refund through the tax preparer agency since they will take a large percentage of your refund. Instead, use a payday cash loan, if you need to pay filing fees or have some extra cash until the refund comes in. Or, go online and run through an automated tax program like Turbo Tax and do it yourself. Many refunds can be deposited electronically within seven to fourteen business days, in some cases. That’s enough time to repay the cash loan and have leftover from your refund.

Even though you can expect to save money on your Federal return due to the help that some of these regulations provide, you might still have to pay on your state tax return. Every state deals with their citizens differently and there may not be any deductions for single parents on your state income tax other than the claiming of your dependents and that tax write-off.

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