What Is Child Tax Credit for Single Mothers For millions of Americans, especially those headed by single moms, tax season is full of tension and number crunching. But, at tax time, being a parent comes with specific perks. Already the life of a single mom is under stress all time, and with the tax, it becomes stressful. There are a few useful tax credits that will lower the amount of taxes to pay. In a few scenarios, provide cash refunds to families in jobs that pay little to stay on.
Claiming a tax credit is putting cash back into your pocket, and for single moms, it can make a huge impact in the end. In fact, at tax time, being a single mother comes with a specific advantage. For instance, eligible single mothers of two who claim up to $6935 in EITC up to dollars in CTC or Child Tax Credit, plus as much as $8000 spent on care expenses.
The CTC or child tax credit is a tax benefit granted to American taxpayers with kids under 17 years at the year’s end. For the year 2022, the CTC is $2000 for each qualifying kid. You become eligible for the complete amount for every kid if you earn up to $200,000 as an individual or filing jointly, then $400,000. The advantage is phased out for parents with higher incomes.
This advantage has reverted to pre-2021 levels after two years; during that emergency, legislation related to the COVID-19 outbreak boosted the advantage to as much as $3000 for every kid and $3600 for kids under 12 years.
The CTC or Child Tax Credit is no longer refundable. Taxpayers whose credit exceeds the liability of tax will not get a check for the unused part of the credit, with exceptions only for specific low-income earners.
Key Takeaways
- The CTC or Child Tax Credit program is a $2,000 for every child tax benefit claimed by attaching schedule 8812 and filing form 1040 to the return.
- The complete benefit available to individuals whose income did not exceed more than$400,000 for joint filers or single mother filers is $200,000. It phases out at higher levels of income.
- To become eligible for the credit, the taxpayer’s dependent should be under 17 years of age and should have an SSN or Social Security Number.
How the Child Tax Credit Works?
The CTC or Child Tax Credit lowers the total taxes of taxpayers owed on a dollar-for-dollar basis. It is better than a tax deduction, that decreases total income tax and gives outcomes in smaller savings.
You should have an SSN or social security number to get the credit for the dependent kid. It might be claimed by filing schedule 8812, and eligible kids are given kids and other dependents with the 1040 form.
The credits are available if the kid or dependent child meets the necessary threshold:
- Is under 17 years at the end of the financial year
- Is a stepchild, child, stepbrother, foster child, stepsister, sister, half-sister, half-brother, or a descendant of any of those family members
- Has stayed with you for more than half the year
- Has contributed not more than half of her or his own support
- Ha has been claimed as a dependent on your income taxes.
- Is a citizen of the United States, resident alien, or national
The Internal Revenue Service provides a useful tool to assist taxpayers in figuring out if their dependent or kid becomes eligible for the CTC or Child Tax Credit. The CTC is not at all considered as earned income. So, it does not impact other government advantages such as Medicaid, unemployment insurance, SSI, SNAP, or Public housing
How to Claim the Child Tax Credit?
Few individuals with low income don’t bother filing income taxes as they understand they don’t owe any cash. It might be a mistake for many reasons. First of all, the lowest income earners have to file an income tax return.
Even more importantly, you might be missing out on a few necessary things that you are eligible to get. One of these is if you have a family, then you have to claim the CTC.
To claim the CTC, a taxpayer should file a 1040 form (United States individual income tax return). Also, a taxpayer should attach the 8812 Schedule (Credits for dependents and eligible kids). Schedule 8812 is used to know the amount of CTC a taxpayer is eligible to get.
Child Tax Credit: Poverty and Policy Impact
The CTC (Child Tax Credit) was established in 1997, and it has benefited most working people; with time, it has been criticized often for offering no or little benefit to the poorest families, several of whom are not taxpayers and they do not file income tax returns.
The emergency measures are prepayment of the advantages to eligible taxpayers. The expansion of the CTC during the outbreak had necessary implications for the economy at large and for moderate and low-income families. Few efforts are made to reach out to low-income families who normally do not file income tax returns, and so it was not identifiable quickly by the Internal Revenue Service when it came time to mail out the checks.
Before the outbreak, amendments often increased the CTC amount and widened the eligibility needs at one time, and refunds were limited to taxpayers with three or more kids. But, for years, the CTC did not reach the poorest or low-income families. For the first time in 2021, the increase in the credit amount and provision of total refundability extended advantages to the neediest families. As per the Social Policy and Poverty at Columbia University, the sixth CTC payment kept 3.7 million kids from poverty in December.
The Child Tax Credit decreased monthly child poverty by almost 31 percent. The complete and expanded refundable CTC was planned as part of the ARPA or American Rescue Plan Act, a rule formally targeted to relieve the economic issues created by the COVID-19 outbreak. It also addressed several restrictions that were considered problematic in the earlier forms of the CTC.
The enlarged credit constituted a big financial commitment. They strongly supported the increased CTC or Child tax credit. The Government undertook an extension of a promotional and public education program to increase the use of credits and their perks.
Who Is Eligible for the CTC or Child Tax Credit?
There are certain rules for the dependent and taxpayer. The credit is phased out at high-income levels and the taxpayer should meet specific relations with the dependent.
Both the kid and taxpayer should have SSN or Social Security Numbers, and only one taxpayer might claim the CTC for any single dependent (even if the dependent may be claimed by other taxpayers). It is tougher to meet the needs of the eligible child. An individual should be under 17 years at the end of the financial year, offer no more than half of their own financial help, and have stayed with the taxpayer for at least half of the year. The eligible kid should be the taxpayer’s daughter, sister, son, step sibling, brother, half-sibling, stepchild, or descendant of any of these.
CTC Income Limits for the financial year
The complete CTC or Child Tax Credit is available to a person who is earning no more than $200,000. For couples, it is $400,000 if filing jointly. The credit phases out, so taxpayers with high incomes might qualify for a partial refund.
How Do I Claim the Child Tax Credit?
8812 Form is used to claim the CTC or Child Tax Credit. It needs you to know each eligible dependent and their SSN or Social Security numbers. It also calculates the amount you become eligible to get. You can also attach the 8812 Form to your 1040 Form
How much does each child get for stimulus?
The American Rescue Plan temporarily expands to $3600 for every kid under six years and $3000 for every kid under age 6 to 17, making it completely refundable and eliminating the $2500 earnings floor.
The better and bigger child tax credit that applied for the financial year, The American Rescue plan, is gone. So, the regulations for taking the kid credit revert back to those that are in place for 2020.
Other Tax Credit programs
We will discuss other Tax Credit programs available to single mothers apart from Child Tax Credit that is:
Education Tax Benefits
There are two tax credits that are available to assist you in offsetting the expenses of higher education by decreasing the amount of your income tax. They are the Lifetime Learning Credit and American Opportunity Credit. If you become eligible for both the Lifetime Learning Credit and American Opportunity Credit, you may prefer to claim the credit but not both of them.
American Opportunity Program for Tax Credit
The American Opportunity Credit program is a tax credit of up to $2500 for the expense of fees, tuition, and course materials that will be claimed for the cost of the first four years of post-secondary education.
Benefit Amount
- The benefit amount for every tax credit is $2,500 for every student
- 40 percent of the credit might be refundable, and the rest amount is non-refundable
- First four years of post-secondary education, only you will get a tax benefit.
Eligible criteria for this program
For single mothers, their income must be less than or equal to $90000 for the financial year, and for couples with jointly, they must have a $180,000 income.
How to apply for the program
To apply for the program, you can directly visit the local office and submit the necessary details to apply for the program.
Lifetime Learning Tax Credit
Unlike the American Opportunity Credit, the Lifetime Learning Credit program is non-refundable, so the maximum credit is restricted to the tax amount you get. Individuals have no restriction on the number of years for that they may claim a Lifetime Learning tax credit.
Benefit Amount
- Credit is restricted to the tax amount that you should pay on your taxable income
- Unlimited number of years
- $2000 tax credit for every student
Eligibility criteria for single mothers
For single moms, the income must be equal to or less than $69000, and for couples, jointly, it must be $138000
How to apply for the program
To apply for the program, you may visit the online site, understand the necessary details and apply for the program.
Student Loan Interest Deduction
You are allowed a tax deduction of up to $2500 every year for the interest amount paid on eligible student loans that include private student loans that you took for yourself, your partner, or your kids.
Eligibility criteria for the program
Single moms must take interest loans for themselves or their kid’s education to become eligible for the program.
How to apply for the program
To apply for the program, you must visit the site and apply directly to the program.
Get Help with Your Taxes
You can get assistance with your income taxes through these programs that are:
Interactive Tax Assistant
If you have any doubts related to tax, you must check out the ITA or Interactive Tax Assistant on IRS.gov. This tool gives answers to a number of questions related to tax. It will also assist in considering if a type of income is taxable, if you are eligible to claim specific credits, and if you may deduct any expenses on your income tax return.
Volunteer Income Tax Assistance (VITA)
The Internal Revenue Service provides free preparation of tax through a grant named VITA or Volunteer Income Tax Help. These websites are open from the January end till 15 April. Also, there is a program named Tax Counseling for the Elderly program that also provides tax-free assistance to all taxpayers, especially those who are above 60 years and are experts in questions related to retirement and pension issues unique to seniors. You can also call on 800-906-9887 for more information or visit the local office directly, and they will ensure to resolve your queries.
Low-Income Taxpayer Clinic
Low-income taxpayer clinics, also named LITCs, are funded by the Internal Revenue Service, that represents low-income backgrounds in disputes with the internal revenue service for a small fee or for free, that includes appeals, audits, and federal litigation of tax and collections issues. If you think that you are eligible and you need any assistance with tax-related issues, then you can find the clinic nearest to you, and you may call the number listed on the appointment list. None of the applications is required to use this service. Each LITC may consider if you meet the income rules and other criteria before it may agree to represent you. If you think that you are eligible and in search of assistance with tax-related issues, then you can call the number and get assistance.
The personal exemption has been suspended
The Jobs Act and tax cuts have been suspended for all dependent and personal exemptions for tax years 2018-2025. For the financial year 2018 and beyond, you cannot claim a personal exemption for your dependents, your partner, or even yourself
Tips related to Child tax for single mothers
Let us discuss a few of the tax tips that single mothers must know:
Consider whether you may file as head of household
Several parents do not understand that the head of the household filing status exists and instead prefer single as their income tax filing status. The head of the household has several tax advantages that include a higher deduction amount. You may file as head of household, and it will reduce your taxable income. To become eligible as head of household, single mothers must:
- Be unmarried on the last day of the financial year.
- Having their kids stay with them for more than six months of the year does not include the time the child spends at school.
- Pay more than 50 percent of the household expenses.
A single mom who has more than 50 percent of custody gets to claim household head. If single moms spend less than 50 percent of the custody cannot file as head of household.
Understand who claims the CTC or Child Tax Credit
Single mothers who file make less than $200,000 and $400,000 if married, who file jointly) may become eligible for the CTC or Child Tax Credit. The child’s citizenship and residence are also taken into account, as she or he should be a nation of the U.S., a citizen of the U.S., or a resident alien of the U.S. For the parent to become eligible for the CTC, the child should be under 17 years at the end of the financial year.
You may claim the CTC or child tax credit that will reduce your income tax by $2000 for every eligible child, that may equal a premium tax break for single moms who have several eligible kids. If the credit is more than your liability of income tax, you may receive $1500.
Single moms with custody, also called custodial parent, is the one claiming kids on income taxes, but there are a few exceptions that may help the non-custodial parent to claim the kid. You can check form 8832, revocation of the release of claim to exemption for kid by the custodial parent, for more details.
Determine Who Claims the Child and Dependent Care Credit
Only the custodial person may claim the dependent care credit. Few exclusions are applicable. If a single mom works for an employer who offers dependent care benefits, the parents might not claim a few or all of the dependent care credit. Payment for dependent care does not become eligible for the credit if an individual who offered the care is one of the following:
- Your own kid who is 18 years old
- Single mother of the kid being cared for
- Any dependent listed on your income tax return
Amount of the Dependent Care Credit
The dependent care cost should be for a kid under 13 years of age or a partner or dependent who is incapable of self-care and stays with you for more than half of the year. Dependent care costs are allowed up to $3000 for one kid and $6000 for two kids, but only a percentage of that cost will be claimed.
Dependent Care Spending Account
For tax breaks on dependent care expenses, you may enroll in a Dependent Care FSA. DCSA is a benefit account that is used to pay for eligible dependent care services that include summer day camp, after or before-school programs, preschool, and adult or kid daycare to help you to work, attend school full-time or look for work. Funds are withdrawn from paycheck pre-tax, that will decrease your tax burden.
Understand How the IRS Treats Child Help and Alimony?
Child help is not at all taxable income. If your separation or divorce agreement was executed after 2018, alimony payments are not at all deductible for the partner who makes the payments, and they cannot be included in the income of the receiving partner. And if a parent paid child help, those payments are not determined as deductible. If a separation or divorce agreement was executed before or on 31, 2018, the opposite applies.
Claim Tax Benefits for Education
To take benefit of as many tax deductions and tax credits as possible, single mothers have to be aware of everything for that they are eligible. The lifetime learning credit (LLC) and American Opportunity Tax Credit assist in defraying the expense of post-secondary education.
Eligible single mothers who are paying for post-secondary or college education for their kids may be able to claim the credits. The American Opportunity Tax Credit, or AOTC, provides a maximum annual credit of $2500 for every student, and the Lifetime Learning Credit provides a refund of up to $2000 for every income tax return.
Also, other particular regulations to each credit, three basic thresholds should be met in order to become eligible for these education credits:
- An eligible student should be enrolled at an educational institution
- The dependent, parent, or a third party should be qualified for education cost for higher education
- The student should be a dependent listed on the filer’s income tax return
Few options are available as tax breaks for single mothers who save for their kid’s futures. A single mom who is planning to pay for college in the future will start saving now using an education savings account or plan 529. Both offer tax-related benefits.
Eligible tuition plans, also named 529 plans, differ from one state to another, but the primary benefit is the same: The earnings are exempt from federal income tax when used for eligible education costs of the designated beneficiary. The exemption implies state income tax too.
Books, fees, room, tuition, and board come under the category of eligible expenses. But contributions to a 529 plan are not at all tax-deductible at the federal level. Also, they may become deductible at the state level. Contributions to cover savings accounts are not determined as deductible, but the amount deposited in the account grows free from tax. The savings account will be used to pay the eligible cost for secondary, elementary, and higher education.
Determine Your Eligibility for the Earned Income Tax Credit
Few parents become eligible for the EITC or earned income tax credit. Single mothers with earned income below specific levels may earn credits that range from $3,733 to $7000 based on their income filing status and the number of kids.
Deduct Adoption Expenses
Single mothers who adopt a kid may claim a non-refundable adoption credit for the legal expenses, fees, and travel expenses linked with a legal adoption. Also, adoptive parents don’t have to pay income tax on income they get from adoption help offered by their employers.
Take Benefit of Free Tax Return Preparation If You Become Eligible
When taking on income taxes as a single mother, the complex Internal revenue service regulations might be confusing, but you deserve to increase your savings and get your money back. Take the advice of a tax expert who will make sure that you file correctly and get all of the tax credits that you become eligible for. If you make $60,000 or even less, you may speak limited English, or you have a disability, then you are eligible for the Volunteer Income Tax help program of the IRS that connects you with a professional volunteer to offer you free basic income tax return preparation help.
Conclusion
Single mothers who are no longer getting the extra CTC (Child Tax Credit) perks that were sent out to taxpayers with dependents in the financial years as part of the Coronavirus emergency legislation. Also, the CTC or Child Tax Credit has not ended yet. The credit is $2000 for every kid or other dependents. Being a single mother, it is difficult to manage life and she is always on her toes to do all the tasks. But, managing finances becomes a burden to single moms, and they might need help, so Government has come forward to help single mothers in the best possible way. They have come up with various programs such as housing help, care help, tax help, and much more. Child Tax Credit is one such program that helps single mothers with tax assistance. You can also check Top 30 grants for single mothers for more information.
FAQ’s
Can you still claim student loan interest on income taxes?
The student loan interest you may claim as a tax deduction that is restricted to $2,500 for the financial year
What is the income limit for student loan interest deduction?
The limit of income amount you will make and still become eligible for the student loan interest deduction depending on your income filing status for the financial year is $85000 if single or $1,70,000 if married and filing jointly.
Can a co-signer deduct student loan interest?
A single mother who co-signs student loans can claim the benefit of student loan interest as long as the student or single mother is a dependent of the co-signer.
What is IRS Form 1098-E?
1098- E IRS form is the student loan interest statement that your federal loan provider may use to report the student loan interest payments to you and the Internal Revenue Service.
Do you get a child tax credit with universal credit?
You cannot claim tax credits, that means child tax credits and working tax credits at a time as universal credits.
How much is a child tax benefit in the USA?
Many families may get the complete amount of $3000 for every kid between 6 to 17 years and $3600 for every kid under six years. To get cash to families soon, the IRS is sending families half of their CTC or Child Tax Credit, as a monthly amount of $300 for every kid under six years and $250 for kids between 6 to 17 years old.
What are the U.S. tax benefits for dependents?
The U.S tax benefits for dependents is $3600 for every qualifying kid under six years and $3000 for eligible kids under 6 to 17 years.
What are the child benefits in N.Y.?
The child benefits in N.Y. is a credit worth up to $2000 for every kid that you claim on your income tax return. Eligible kids are 16 years or young. Your family will become eligible even if you do not earn income or have any income taxes.
How much cash assistance will I get in N.Y. with a child?
The cash assistance is based on your family size and income. N.Y. pays $789 every month to a family of three individuals. Also, one of the most generous is the contiguous District of Columbia and 48 states.
What is a qualifying child?
A qualifying child is one for the EITC or Earned income tax credit, and your kid should be your: daughter, stepchild, son, foster child, or adopted kid. Also, qualifying children include Half-brother, sister, half-sister, stepbrother or stepsister, nephew, grandkid, or niece. They are called qualifying children.
Who qualifies for N.Y. earned income credit?
To become eligible, you must have earned income from a part-time or full-time job. Earned income means all the taxable income you get from your business or your job. If you are not sure what qualifies as earned income, you may get more details on the Internal Revenue Service site.