Taxpayers with children may qualify for certain tax benefits. Parents should consider child-related tax benefits when filing their federal tax return:
1. Dependent. Most of the time, taxpayers can claim their child as a dependent. Taxpayers can generally deduct $4,050 for each qualified dependent. If the taxpayer’s income is above a certain limit, this amount may be reduced. If you need help figuring out whether your child can be claimed as a dependent on your tax return, please call the office.
2. Child Tax Credit. Generally, taxpayers can claim the Child Tax Credit for each qualifying child under the age of 17. The maximum credit is $1,000 per child. Taxpayers who get less than the full amount of the credit may qualify for the Additional Child Tax Credit. Not sure if your child qualifies for the Child Tax Credit? Give the office a call.
3. Child and Dependent Care Credit. Taxpayers may be able to claim this credit if they paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. Taxpayers must have paid for care so that they could work or look for work. Tip: Even if you don’t have dependent children, if you care for an elderly relative and can claim him or her as a dependent, you might be able to take the Child and Dependent Care Credit if you work or are looking for work. Please call for details.
4. Earned Income Tax Credit. Taxpayers who worked but earned less than $53,505 in 2016 should look into the EITC. They can get up to $6,269 in EITC. Taxpayers may qualify with or without children.
5. EITC and ACTC Refunds. Because of new tax-law change, the IRS is not able to issue refunds before February 15 for tax returns that claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). This applies to the entire refund, even if a portion of the refund is not associated with these credits. The IRS will begin to release EITC/ACTC refunds starting February 15. However, as long as there are no processing issues with the tax return and the taxpayer chose direct deposit, the IRS expects refunds to be available in bank accounts or debit cards during the week of February 27.
6. Adoption Credit. It is possible to claim a tax credit for certain costs paid to adopt a child. For details, see Form 8839, Qualified Adoption Expenses.
7. Education Tax Credits. An education credit can help with the cost of higher education. Two credits are available: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits may reduce the amount of tax owed. If the credit cuts a taxpayer’s tax to less than zero, it could mean a refund. Taxpayers may qualify even if they owe no tax. Complete Form 8863, Education Credits, and file a return to claim these credits.
8. Student Loan Interest. Taxpayers may be able to deduct interest paid on a qualified student loan. They can claim this benefit even if they do not itemize deductions. If you’re not sure if interest you paid on a student or educational loan is deductible, don’t hesitate to call.