Tax Options for When You Have Children

When you think of taxes, you may think about only owing money. However, now that you have brought a new addition into your household you may be eligible for some tax reductions!

Child Tax Credit

This is the one that most people qualify for. This is for people who have children in their home under the age of 17. You can receive $1,000 per each child at the end of the year, however there are some limitations. People can only receive this reduction if they are making a certain amount. If you are a married couple filing separately then you need to make less than $55,000 annually. If you are single, head of household, or a qualifying widow then you need to make less than $75,000 annually. If you are a married couple filing jointly then you need to make less than $110,000 annually. The child that will allow you to qualify for this credit has to either be your biological son/daughter, stepchild, foster child, brother, sister, stepsibling, half-sibling, etc.

Earned Income Credit

Childcare costs can be expensive but luckily there are more reductions that may be available to you! This reduction designed to help working-class low-income families. Another benefit to this is the fact that these credits are refundable. This reduction is based on your household size and adjusted gross income.

Adoption Credit

When you adopt a child, there are a lot of expenses that you need to account for. Luckily, the government realizes this and has created a reduction that hopefully counteracts some of the fees associated with adopting. When you adopt you will have travel expenses, court costs and attorney fees, as well as the overall adoption fee. As of 2016, the maximum amount of money that you can get per child is $13,460

College Credits for Your Children

There are multiple credits available for when your children reach college age. Credits like the Lifetime Learning Credit, the American Opportunity Tax Credit, and more are available for parents who pay the fees on eligible students.

Medical Deductions

Medical expenses with children will happen no matter what. However, if your child has specialized healthcare needs them you may benefit from itemizing them on your tax return. This is specifically meant if your child’s health expenses exceed 10% of your adjusted gross income. It is even less than that at 7.5% if your spouse if 65 years old or older. If you do qualify then make sure to save receipts!

Overall

Tax laws are constantly changing. However, making sure you look into all possible deductions for the state you’re in can help you big time. Whether you are filing your taxes online or are going to an accountant, make sure to review what options you have for reductions. Before you file you can search through the tax documents on the IRS website and see what may be beneficial to your financial situation. Taxes don’t need to be stressful. Take time to research and prepare properly and you will be able to find what you can do!