Let’s face it: raising kids is expensive! Between school supplies, sports fees, and everyday expenses, it can feel like the costs never end. But here's the good news! There are several tax breaks designed to help ease the financial burden of raising a family. Here’s a breakdown of some key tax benefits that could put more money back in your pocket:
1. Child Tax Credit (CTC): A Little Extra Help for Each Child
The Child Tax Credit is like a helping hand from the government to families raising kids. If you have children under 17, you could get up to $2,000 per child. This credit is partially refundable, which means you could receive some of the credit back even if you don’t owe taxes.
- Who qualifies? Your child needs to meet specific age, relationship, and residency requirements. Plus, your household income must be under $200,000 for individuals or $400,000 if you’re filing jointly.
- What does it cover? This credit is there to help with everyday family expenses, so you can keep providing the best for your kids.
Learn more at www.irs.gov/credits-deductions/individuals/child-tax-credit
2. Credit for Other Dependents (ODC): Help for Family Members Who Aren’t Kids
Not all dependents are under 17, but you can still get a break for them! If you support other dependents (like older children, elderly parents, or relatives), the Credit for Other Dependents offers up to $500 per person.
- Who qualifies? This credit helps if you’re supporting a relative or older child living with you who doesn’t qualify for the Child Tax Credit. As long as they meet IRS guidelines, you’re eligible.
- Income limits: Your adjusted gross income must be under $200,000 for individuals or $400,000 for joint filers.
For more info visit www.eitc.irs.gov/other-refundable-credits-toolkit/what-you-need-to-know-about-ctc-and-actc/what-you-need-to-know
3. Child & Dependent Care Tax Credit (CDCC): Relief for Working Parents
If you’re juggling work, school, and childcare, this credit is designed to give you a little extra financial support. The Child & Dependent Care Credit helps families pay for childcare expenses so they can keep working or going to school.
- How much can you get? You could claim up to $3,000 for one child or up to $6,000 for two or more kids in childcare.
- What counts as care? Daycares, babysitters, day camps, and some before- or after-school programs may qualify.
- How is the amount calculated? The credit depends on your income and the amount you spent on care.
Get the details at www.irs.gov/credits-deductions/individuals/child-and-dependent-care-credit-information
4. Earned Income Tax Credit (EITC): More Money for Low- to Moderate-Income Families
The Earned Income Tax Credit (EITC) is a great benefit for working families. Depending on your income and family size, you could be eligible for up to $7,830 in tax savings!
- How much can you get?
- Up to $4,213 with one qualifying child
- Up to $6,960 with two qualifying children
- Up to $7,830 with three or more qualifying children
The EITC could be a real game-changer for your family’s finances, so be sure to check if you qualify.
For more information, head to www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc
5. Adoption Tax Credit: Making Adoption More Affordable
Adopting a child is an amazing journey, but it can also come with significant costs. The Adoption Tax Credit is here to help. This non-refundable credit helps you offset the costs associated with adopting a child. If you adopted an eligible child in 2024, you may be eligible for this benefit.
- How much can you claim? Up to $16,810 for qualifying adoption expenses, including adoption fees, court costs, and other related expenses.
- Does it apply to all adoptions? Yes! Whether you're adopting through a private agency, foster care, or internationally, this credit could help lighten the load.
Learn more about this credit at www.irs.gov/credits-deductions/individuals/adoption-credit
6. State Tax Benefits: Extra Savings from Your State
In addition to federal tax credits, many states offer their own tax breaks, such as deductions for dependents, child tax credits, and credits for specific child-related expenses. Be sure to check out what’s available in your state – every little bit counts!
Visit www.childcare.gov to see what’s available in your state!
The Bottom Line
Tax credits can add up to significant savings for your family – potentially thousands of dollars each year. Whether you’re caring for young kids, helping older dependents, or balancing work and childcare, there are credits designed to ease your financial load.
A tax advisor can help you make the most of these credits, guiding you through the paperwork and ensuring you don’t miss out on money you deserve. So don’t wait – make sure you’re taking full advantage of these family-friendly tax breaks!
