9 Tax Breaks for Parents: How Kids Could Save You $1,000s in Taxes

Google+ Pinterest LinkedIn Tumblr +

Does the notion of performing your taxes in addition to caring for your children make your head spin?

Take a deep breath: We discovered eight tax breaks for young adults.

Whether your kids are swaddled newborns or seeking college degrees; if you’re single, married with children or adopted this year, then you are eligible for some cash back on tax afternoon .

9 Benefits and Tax Credits for Children

Listed below are the best tax credits and deductions for parents to keep in mind.

Out-of-Pocket Medical Expenses

In the event you had a kid last year, paid out of pocket for medical expenses during your pregnancy and so were not reimbursed, then you’ll be able to itemize those numbers as deductions.

This tax code requires the expenses to be 10% of your adjusted gross income. That might seem unreachable, but since you will be billed item by item for prenatal care and childbirth, then it can start to add up.

These girls paid up to $6,285 at the time their last check hit the mail box, so make sure to keep your receipts!

Child Tax Credit

Once your child is born, you’re qualified for the Child Tax Credit, which pays up to $1,000 for every child below the age of 17, depending upon your income.

This might appear obvious, but it is important to notice: Even when your child is born on Dec. 31, then it is still possible to claim them for that year.

Remember to claim this credit for each of your children — in case you’ve got more than one, they each qualify for up it till they turn 17 years of age.

Adoption Tax Credit

The adoption procedure is notorious for being lengthy and costly.

The Adoption Tax Credit is worth up to $13,000 that will help you relieve that fiscal strain. This credit covers travel expenses, court costs and lawyer fees, as well as home-study expenses.

It’s very important to keep all receipts throughout the process and document for the year that you adopted a kid .

Earned Income Tax Credit

If you earned income last year but didn’t exceed certain thresholds, you may qualify for the Earned Income Tax Credit, that may significantly reduce your tax bill.

The income limits rely on your filing status and how many children you have. As an example, if you’re filing as single or head of household and have one kid, you should have earned less than $39,296. If you are filing jointly with your spouse and have three qualifying children, you have to have earned greater than $53,505.

The highest amounts of charge change slightly every year. For your 2016 tax season, the maximum numbers of credit were:

  • $6,269 for 3 or more qualifying children
  • $5,572 using two qualifying children
  • $3,373 with one qualifying child

Note: you might also be eligible for the Earned Income Tax Credit without having a kid .

Child Care Tax Credit

The cost for center-based daycare for babies can range anywhere between $6,605 and $20,209 per year, although the cost of center-based daycare for toddlers can vary anywhere between $8,043 and $18,815 annually, according to a poll by Care.com.

If you are paying for child care, you may be able to have a chunk of that back on your taxes.

If your child is 13 years old or younger and you also pay for child care while you’re either working or looking for work, you qualify for the Child Care Tax Credit. According to the IRS, the amount of the credit varies. It is a percentage based on the amount of work-related expenses you paid for a care provider for care for a qualifying person.

The quantity of expenses you can use to figure out the credit can be no longer than $3,000 for one qualifying individual and no greater than $6,000 for two or more qualifying individuals.

Head-of-Household Status

If you are single and have a child, don’t overlook this critical thing: your status.

If you record as a head of household, you’re automatically qualified for a lower tax rate than if you file as single.

To be regarded as the head of family, you need to:

  • Be unmarried on Dec. 31
  • Contribute more than 50 percent of their financial support of the family
  • Have a dependent who lives with you for more than six weeks of the year

If your son or daughter is in school and is still depends upon your earnings, you can maintain their college expenses. There are 3 unique types of post-secondary school credits, however you can just use one at one time.

American Opportunity Tax Credit

During the initial four decades of your kid’s school education, you are able to claim up to $2,500 for tuition and related expenses below the American Opportunity Tax Credit.

Your child should attend college at least a while. The earnings threshold for individual parents is $80,000; married couples must make no more than $160,000.

Take advantage of this attribute while you can — it’s just accessible through 2017.

Lifetime Learning Credit

Contrary to the American Opportunity Tax Credit, there’s not any limitation to the amount of times you are able to maintain the Lifetime Learning Credit for schooling costs to reduce your tax invoice.

Worth up to $2,000, the LLC covers tuition, fees, equipment and supplies.

To qualify, your modified adjusted gross income must be $65,000 or higher (or $131,000 or greater if you are filing jointly with your partner ).

State Tax Credits for Parents With Children in Elementary or High School

Some states offer benefits pay for certain things or activities during the college year.

In Arizona, by way of example, if your kids attend school, you’re eligible for a tax credit for any fees associated with extracurricular activities, including sports gear or pastries. You can even qualify for the credit in the event that you spent money on their SAT/ACT tests or prep courses.

When it will not affect your federal return, start looking for such credits after filing your state taxes.

Additional Parent-Child Tax Items to Consider

Ask yourself two more questions prior to submitting your return, setting your feet up and enjoying a pleasant break.

Which Parent Should Claim the Kid?

A catchy part of being separated or divorced is figuring out who’s supposed to claim the child on their tax return.

To make the phone, the IRS typically appears at where the kid sleeps for more than half the calendar year, however, there are some unique exemptions regarding who can claim the child and if.

It gets a little tricky, but this IRS chart answers an assortment of questions that you might have.

Can Your Child Function?

If your kid has a job, make sure that they record their own tax return.

Teens who work while in school usually don’t make enough cash to have a liability. So, even though their companies have likely withheld taxes throughout the year, they’ll get them back in a refund check — which is a nice incentive.

In addition, it is a wonderful way to continue teaching them about money.

Share.

Leave A Reply