Raising children can be expensive, but did you know that there are several tax credits and deductions available to help ease the financial burden? By taking advantage of these tax benefits, families can save money on their taxes and have more funds available to cover the costs of raising children. In this blog post, we'll discuss five tax credits and deductions that families with children should be aware of.
1- Child Tax Credit
The Child Tax Credit is a tax credit worth up to $2,000 per child under the age of 17. The credit is partially refundable, meaning that even if you don't owe any taxes, you may still be able to receive up to $1,400 per child as a refund. To qualify for the full credit, your income must be below a certain threshold. If your income is above the threshold, you may still be able to claim a partial credit.
2- Earned Income Tax Credit (EITC)
The EITC is a tax credit for low- to moderate-income working families. The credit is worth up to $6,728 for families with three or more children. To qualify, you must have earned income and meet certain income limits. The credit is refundable, meaning that you may be able to receive are fund even if you don't owe any taxes.
3- Child and Dependent Care Credit
The Child and Dependent Care Credit is a tax credit for parents who pay for childcare expenses so that they can work. The credit is worth up to $3,000 for one child and up to $6,000 for two or more children. To qualify, you must have earned income and meet certain other requirements.
4- Education Tax Credits
There are two tax credits available to help families pay for higher education expenses: The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is worth up to $2,500 per student for the first four years of college, while the LLC is worth up to $2,000 per tax return. To qualify for these credits, you must have paid for eligible education expenses and meet certain other requirements.
5- Medical Expense Deduction
If you have significant medical expenses related to raising a child, you may be able to deduct those expenses from your taxes. To qualify for this deduction, your medical expenses must exceed 7.5% of your adjusted gross income. To learn more about Medical Expense Deduction and how it can benefit you, check out our blog post on "Can You Claim a Deduction on Medical Bills?" which provides detailed information on this topic.
If you have children, you may be eligible for tax credits and deductions that can help you save money on your taxes. A qualified tax professional can help you determine if you are eligible for these benefits and make sure you claim them correctly. At Accountants Now, our team of experienced accountants can help you maximize your tax savings. We offer a variety of tax services, including tax preparation, tax planning, and tax consulting. We can help you with all of your tax needs, from simple to complex.
Contact us today to schedule a consultation and learn more about how we can help you with your taxes.