A child is one of the most precious things in the world. They allow us to see the world from a different perspective, and allow us a fresh take on sometimes complex issues. As parents, children are the reason we get up in the morning, get dressed, and head into the office. Mostly so we can pay for all the food they eat and stuff they break. But also to provide a child with a safe, secure, and loving environment to grow from tiny humans into functional members of society. These adorable, mini-versions of ourselves also offer another benefit that many of us overlook–tax credits!
Common Child Tax Credits
Most of us are aware we can claim our kiddos as dependents when we file our taxes. The IRS allows a $4000 deduction per dependent (though if you make a boatload of cash, this deduction is decreased) for 2016. This credit is reduced with higher incomes. The aptly named Child Tax Credit is another credit which parents can claim for qualifying children under the age of 17. It allows for $1000 per qualifying child, which just may pay for a couple of weeks’ worth of snacks if you have a teenage boy in your house. You can get more information on the child tax credit by visiting the the IRS website.
Child and Dependent Care Credits
Child care costs a small fortune. A lot of families have two working parents simply to cover the cost of child care. The good news is, a lot of the cost can be claimed as a credit for children under the age of 13. The stipulation is that childcare costs must be the result of working parents or parents looking for work.
Earned Income Tax Credit
Families who earn less than $53, 267 in 2015 may be able to qualify for this credit. It allows a credit of up to $6242 for some families. You can see if you qualify by using this tool. You may actually qualify for EITC without children.
Education Tax Credits
Student loans and student loan debt seem to follow some people until they day they die–even after you enter the realm of parenthood. If you weren’t lucky enough to have parents with the foresight to start your college savings account the minute you took your first breath, you may be all too aware of the ghost of student loan debt that haunts you to this day. The IRS is generous enough to allow for a couple of different education credits. Student loan interest on qualified student loans is actually deductible, even if you don’t itemize your deductions. There are two other higher education credits available from the IRS, including the American Opportunity Tax Credit and the Lifetime Learning Credit.
Ah, the joys of parenthood. It is the most rewarding and the most thankless job on the planet. It is also one of the most expensive jobs there is. And until your brood is capable of supporting themselves, you can at least rest a little easier knowing the IRS will offer you a little bit of a break. It seems even the Internal Revenue Service understands just how quickly a small, helpless human being can drain your bank account by offering some credits. The Child Tax Credit, Child and Dependent Care Credits, Earned Income Tax Credit, and Education Tax Credits are among some of the most commonly used child credits and deductions. For questions about whether you qualify for any of these credits, speak to your tax professional, or schedule an appointment with us!