Something wicked and dreaded is coming this way – American tax day. With the deadline to file so close at hand – April 18th, to be exact – all taxpayers and especially single parents are crunching numbers and eagerly awaiting refund checks.
Luckily for us, the digital age has simplified the process of tax preparation with automated prompts, efile software, and accessible information. It’s now entirely feasible for someone who isn’t financially canny to file for tax credits and list deductions without consulting (read: paying) a pro.
However easy it might be to file a tax return, it’s tougher to deal with the individuals with whom you may share a dependent. Single parents have it rough on all sides and money is no exception, which is why every single parent needs to know about the Earned Income Tax Credit, or EITC.
The maximum EITC credit depends on your income and the number of children you are claiming for the credit. The IRS maximum credits are:
* If you made less than $35,535 and have 1 qualifying child : $3,050 maximum
* If you made less than $40,363 and have 2 qualifying children: $5,036 maximum
* If you made less than $43,352 and have 3 or more qualifying children: $5,666 maximum
Even if you aren’t claiming the child on your taxes, you may claim them for the EITC. Single parents have to tread this part of the deal with caution because a child can only be claimed for the EITC by one tax payer, period. This can be a somewhat sticky situation for parents with joint custody. If you share parenting time and duties equally, who gets the money? Tax time just got uglier.
In a somewhat endearing gesture to seem humane, the IRS offers a few solutions, or “tie-breaker rules”:
* If only one parent is blood-related, the biological parent can claim the EITC.
* The parent that made more money, or Adjusted Gross Income (AGI) can claim the EITC.
Still seem unfair to you? There are other possibilities that the IRS does not officially endorse, too, but can work when the “tie-breaker rules” leave you in the dark:
* Investigate how much EITC credit money each parent would qualify for; whichever parent would be awarded the most in credit money should file for the EITC. Split the EITC down the middle, just as you do with parenting responsibilities.
* Make a tax schedule that allows one parent to file for the EITC one year, and the other in the following year.
* Whichever parent doesn’t claim the child on their basic tax forms should file for the credit.
* Consider dividing the credit money into thirds each year, placing one third into a savings account that will help pay for college when the time comes.
At the heart of all of this is your child – the American government wants to ease the financial burden of parents who might not otherwise be able to afford necessities such as shoes, vitamins, or school supplies. What’s in the best interest of your little dependent?
Rae Alton is a content specialist and marketer from Greensboro, NC. She is thrilled to be a guest contributor with RichSingleMomma.com and can be found on twitter @raezin1984.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
