Divorced Massachusetts parents often have a lot on their plate when it comes to raising their children on their own while trying to balance out a work schedule. However, there are also certain federal tax considerations that they may need to take into account, especially because the parent's situation may make them eligible for certain deductions and a lower tax rate.
For example, a parent who qualifies for head of household income tax filing status may have a lower tax rate with higher deductions than those who do not. To be considered head of a household, the parent must have the children living with them for at least six months each year and earns more than half of the household income. Heads of household may also claim up to $3,000 for one child and $6,000 for two children for child care expenses that qualify for this purpose, although the benefit is phases out after a certain income level is reached. If the head of household earned less than $46,997 and has three children, they may also be eligible to receive the earned income tax credit.
Additionally, single parents should determine who they can claim as a dependent. A parent may be entitled to do so for a child who lives with and is financially supported by that parent for at least six months of the year. Single parents who qualify can be entitled to certain exemptions and credits.
When parents go through a divorce, there are a number of things that must be agreed upon by both parties. This includes who can claim the children on their taxes and other tax-related issues. An attorney can explain how the decisions that are made during the divorce will affect the parent in terms of future income tax consequences.
Source: Forbes Magazine, "8 Things Single Moms And Dads Need To Know About Taxes", Emma Johnson, Jan. 26, 2015