Best Tips for Moms this Tax Season
Tax season poses quite a few challenges for many households, but moms can tend to find themselves scrambling the most to ensure they’re taking advantage of every credit and break. With the tax code being a chore to navigate, it’s almost impossible to feel confident that you’re maximizing your refund as a parent before you send off your documents to the IRS.
It’s a pain point that all parents face, but there are a number of ways moms can save money on taxes.
Before you struggle and sift through mounds of documents to complete your annual return, take a look at these six tips to guarantee the money you’re owed.
If Possible, File as Head of Household
If you’re a single parent, don’t file under the Single taxpayer status. You’ll fall into a higher tax bracket than you should, thus lowering your standard deduction and minimizing your refund. Instead, file as Head of Household so long as you have paid more than 50% of your home’s costs for the year and have a dependent that has lived with you for more than 50% of the year.
Head of Household lets you claim a higher standard deduction ($19,400 compared to $12,950 for Single in 2023) to lower your tax rate.
Claim Both the Earned Income and Child Tax Credits
The Earned Income Tax Credit and Child Tax Credit are two separate categories that tax-filing moms may be able to claim. The former, shortened to EITC, basically requires an earned income below $58,187. Depending on your situation, you could walk away with a credit of just under $7,000 depending on your financial situation. You don’t even need children to qualify, so long as your income is low enough.
The Child Tax Credit, as the name implies, does require a financially-dependent child of no more than 17 years old. So long as they lived with you for more than half the year and are claimed as a dependent on your return, you’ll likely be eligible for the credit. As of 2023, the maximum credit per child is $2,000.
The Child Tax Credit is separate from EITC, and it’s possible to claim both on one tax return so long as you meet the individual qualifications.
Don’t Forget the Child and Dependent Care Credit
If you’re the mother of a child that underwent care throughout the year and you file Head of Household, you may qualify to have some of those expenses offset by the Child and Dependent Care Credit. As of 2023, the maximum allowed expenses used to calculate the credit can be no more than $3,000 for one individual or $6,000 for two or more.
Just like with EITC and the Child Tax Credit, you’re able to claim the Child and Dependent Care Credit even if you claimed either or both of the other two. It’s not going to get you the biggest return, but it’s definitely a credit you won’t want to overlook.
See If You Qualify for the American Opportunity Tax Credit
If you went to school or had a dependent child attend college during the tax year, you may qualify for the American Opportunity Tax Credit (AOTC). This credit attempts to help cover some education expenses, such as tuition. Qualifications are a little more complicated, especially if you’ve claimed the AOTC in the past, but you can add a credit of at least $2,500 for four years you’re in school.
If you’ve paid toward the interest on your student loan, you may be able to deduct part of this amount from your tax liability. Generally speaking, if you’ve made any payments toward your student loan during the tax year, then you’ve paid toward its interest.
Take Advantage of Low-Cost Tax Filing
The most difficult part of tax season is getting everything together and ensuring all your i’s are dotted and t’s are crossed. Enlisting help is the best way to avoid complications and a possible audit, but don’t spend hundreds on your local tax preparer. Let’s Get Set offers a simplified tax filing platform powered by Column Tax for a fraction of the cost of a preparer.
You can even go with a partner preparer, such as the IRS’s Volunteer Income Tax Assistance (VITA) program that helps filers making less than $60,000 per year or the non-profit MyFreeTaxes.com.
With how expensive everything is, every penny can make a difference, so don’t miss out on these crucial means of saving on your taxes. Take your time while filling out all forms and, if you’re using a preparation service, be sure to specifically ask what tax credits and deductions you may be able to take as a parent.
Don’t stress this tax season. Keep these tips in mind and you’ll enjoy a larger refund.
