Single parents, save! The federal Saver's Credit is designed to encourage taxpayers to save for retirement. It's geared toward low- and moderate-income workers and, depending on their income, could offer a boost to single parents, too.
To take advantage of a Saver's Credit, a single parent needs to contribute to an Individual Retirement Account (IRA) or an employer's 401(k) plan. The Saver's Credit is meant to offset a portion of the first $2,000 that is put into retirement savings, as long as the contributions are made during the tax year 2014 for a 2015 tax filing or, in the case of an IRA, made before April 15, 2015.
Certain restrictions do apply, though. A single parent filing as head of household could earn an income up to $45,000 in 2014 and still be eligible for the Saver's Credit. The credit is calculated based on filing status, adjusted gross income, tax liability and the amount contributed to qualifying tax programs. The maximum amount that could be received as a tax credit is $1,000 for single head of household taxpayers. To borrow an old adage about shoes and feet: If the saving fits, claim it [source: IRS].
Author's Note: 10 Tax Credits for Single Parents
The voluminous tax code can be difficult to wrap your arms around, let alone track the annual changes and understand how they impact how you file. Being diligent, whether by doing your homework or hiring a tax preparer, can make a difference. I've found my best strategy is somewhere in the middle. I get professional help for my taxes but try to understand which tax credits could be applied to my situation, too.
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Many Americans don't think about their tax bills until the new year. But there are things you need to do before Dec. 31 if you want to pay less later.