What Tax Benefits Are Available for Parent(s) With Children?
If you have children, consider these important tax benefits available to you.
In most cases your child can be claimed as a dependent in the year they were born. So if your child was born on December 31st, you can claim that child as a dependant on your personal income tax return for that tax year.
Here is the list of several tax credits that you can claim on your personal income tax return, only if you have and can claim your kids as dependant children.
Child Tax Credit (1). This tax credit applies to your dependant children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible to claim Additional Child Tax Credit on your personal income tax return. This Additional Child Tax Credit is a refundable credit and may give you a refund even if you do not owe any tax.
Child and Dependent Care Credit(2). This tax credit applies to your if you need to pay someone to care for your child under age 13 so that you can work, look for work, or go to school as a student. If you filing jointly both parents need to be working or in search for work, or in school.
Earned Income Tax Credit(3). This tax credit applyies to low income taxpayers. The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you would otherwise owe and may also give you a refund.
Adoption Credit (4). You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child.
If your child had income weather from working or from investments you should know these facts:
Children with Earned Income (5). If your child has income earned from working they may be required to file a tax return.
Children with Investment Income (6). Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate or at the child individual tax rate.
If you are thinking in putting some money aside for your child’s education, here are some facts to know.
Coverdell Education Savings Account (7). This savings account is used to pay qualified educational expenses at an eligible educational institution: School, Colleges, Seminaries, etc. Contributions are not deductible, but the gains inside this account will not be taxable if money is used for paying for qualified educational expenses.
Higher Education Credits (7). Lifetime and Hope Education tax credits can help offset the costs of higher education. These education credits reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. If a parent paid for their dependent child college, the parents can claim a this credit on their personal income tax return.
Student Loan Interest (7). You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.
For more information click on the following IRS Publications to learn more.Personal Tax ArticlesThis article was written by TaxBizPro, LLC 2020, all rights reserved ©.
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