Tax Breaks for Parents You Don’t Want To Miss
Raising kids is expensive and it’s important to make every dollar go as far as you can. So when tax time rolls around parents want to find all the tax breaks for parents possible.
If you are looking for help saving on your taxes, here are some tax breaks for parents of kids 17 and under to help you out.
Child tax credit
Next, there’s the child tax credit. It reduces the amount of income tax you owe by up to $1,000 for every child living with you, under age 17. But it’s only for couples earning less than $110,000 a year. A reduced credit is available for incomes between $110,000 and $130,000. For single parents, the maximum you can earn is $75,000 to receive this credit. For those married filing separately, the maximum adjusted gross income is $55,000.
Additional child tax credit
Related to the child tax credit above is the additional tax credit for lower-income families. The child tax credit can only be deducted from what you already owe in taxes, but the additional child tax credit can be refunded to you.
For example, if you have one child and you owe $900 in taxes, what you owe will be deducted to zero – and then you could be eligible for the additional tax credit that refunds you the balance of $100.
Just note that the combination of these two credits – the child tax credit and the additional child tax credit – can never exceed $1,000 per child, says Barry S. Kleiman, principal CPA at Untracht Early. As an example, he says a married couple earning $60,000 jointly, with a taxable income of $30,000 and a tax liability of $4,500, could only receive $2,000 for their 2 kids in total ($1,000 per child). Because they can’t get more than $1,000 per child, they would not qualify for the additional child tax credit. – Yahoo Finance
Help For Working Parents
Below are three more tax credits that can help working parents depending on their income level. If you are eligible to use a combination of the tax credits you find here it can make a big difference when the time comes to file your taxes.
These are only some of the tax credits available to parents. Seek out information on every possible tax credit that applies to you before filing your taxes this year!
Earned Income Tax Credit
This tax credit is for low- and moderate-income taxpayers, including those without children, though it’s more valuable if you have children. “It’s a credit for working parents,” Greene-Lewis says. If you don’t have kids, your income can’t be more than $14,880 ($20,430 if married filing jointly). With one child, the income limits are $39,296 and $44,846. With two, the income limits are $44,648 and $50,198. With three or more children, the limits are $47,955 and $53,505. If you have more than $3,400 a year in investment income, you don’t qualify. The credit is $510 with no children, $3,400 with one, $5,616 with two and $6,318 with three or more children. This is a refundable tax credit, which means you could get a refund without paying any taxes.
Child and Dependent Care Credit
This credit is designed for working people, so parents claiming the credit must have earned income or be in school. It’s worth less at higher income levels, but there is no top income limit. It provides a tax credit of 20 to 35 percent (depending on income) of $3,000 in expenses for one child or $6,000 for more than one child who’s 12 or younger. The credit can also be used toward care for disabled adults in the family. If your income is higher, you might save more by paying childcare expenses through a flexible spending account, which allows you to use up to $5,000 in pretax money toward child care.
Single head of household status
Single people with dependents are eligible to file as head of household, which provides a larger standard deduction ($9,600 versus $6,300) if you don’t itemize and more favorable tax brackets. – AOL Finance
Are you taking advantage of every possible tax break?