Kids can be stressful at times, but the good news is they can save your butt during tax time.
Today we are sharing some of the tax benefits that kids and other dependents bring to you.
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Dependent Tax Deductions
You may be able to claim more dependent tax deductions and credits as a family than single taxpayers.
However, if you’re not aware of these deductions and credits, you might be losing out on significant tax breaks.
Child Tax Credit
The child tax credit is better than a deduction because your taxes are reduced dollar for dollar. In addition, claiming this credit gives up to $2,000 for children under 17.
Married couples qualify if they don’t make more than $110,000, and single parents qualify if they don’t make more than $75,000.
Child and Dependent Care Credit
Uncle Sam understands that childcare is expensive. Therefore, working parents or parents actively pursuing employment for dependents under 13 can claim the Child and Dependent Care Credit.
This credit is another dollar-for-dollar reduction of your taxes for up to 35% of your expenses. This equals $3000 for one child or $6000 for two or more children.
Depending on your income, 20% – 35% of your childcare expenses (based on your income) can be reduced. Nursing school, private kindergarten, daycare, and after-school programs all qualify.
Earned Income Tax Credit
How much you get depends on the number of children you have. Below are the phase-out limits.
- 3 or more children – $51,464 ($57,414 for married joint filers)
- 2 children – $47,915 ($53,865 for married joint filers)
- 1 child – $42,158 ($48,108 for married joint filers)
The credit ranges from $1,502 (no children) to $6,728 (three children). The best part is this is a refundable tax credit so it can result in a tax refund.
How to Claim Dependent Tax Credits
The next time your kids are working your nerves, remember that they save your butt big time during tax season.
If you file your taxes online, they will make sure that you claim all the tax credits you deserve, and all you have to do is answer a few simple questions.