Taxpayers with children may qualify for certain tax benefits. Parents should
consider child-related tax benefits when filing their federal tax return:
- 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.
- 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.
- 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.
- Earned Income Tax
Credit. Taxpayers who worked but earned less than $53,505 last year should look
into the EITC. They can get up to $6,269 in EITC. Taxpayers may qualify
with or without children.
- Adoption Credit. It is possible to claim
a tax credit for certain costs paid to adopt a child.
- 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.
- 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.
- Self-employed Health
Insurance Deduction. Taxpayers who were self-employed and paid for health
insurance may be able to deduct premiums paid during the year.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
The Child Tax Credit is a tax credit that may save taxpayers up to $1,000 for each eligible qualifying child. Taxpayers should make sure they qualify before they claim it. Here are five facts from the IRS on the Child Tax Credit:
1. Qualifications. For the Child Tax Credit, a qualifying child must pass several tests:
- Age. The child must have been under age 17 on Dec. 31, 2016.
- Relationship. The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include grandchildren, nieces or nephews. Taxpayers would always treat an adopted child as their own child. An adopted child includes a child lawfully placed with them for legal adoption.
- Support. The child must have not provided more than half of their own support for the year.
- Dependent. The child must be a dependent that a taxpayer claims on their federal tax return.
- Joint return. The child cannot file a joint return for the year unless the only reason they are filing is to claim a refund.
- Citizenship. The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
- Residence. In most cases, the child must have lived with the taxpayer for more than half of 2016.
2. Limitations. The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate a taxpayer’s credit depending on their filing status and income.
3. Additional Child Tax Credit. If a taxpayer qualifies and gets less than the full Child Tax Credit, they could receive a refund, even if they owe no tax, with the Additional Child Tax Credit.
Because of a new tax-law change, the IRS cannot issue refunds before Feb. 15 for tax returns that claim the Earned Income Tax Credit (EITC) or the ACTC. This applies to the entire refund, even the portion not associated with these credits. The IRS will begin to release EITC/ACTC refunds starting Feb. 15. However, the IRS expects these refunds to be available in bank accounts or debit cards at the earliest, during the week of Feb. 27. This will happen as long as there are no processing issues with the tax return and the taxpayer chose direct deposit.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
Day camps are common during the summer months. Many parents enroll their
children in a day camp or pay for day care so they can work or look for work.
If this applies to you, your costs may qualify for a federal tax credit. Here
are 10 things to know about the Child and Dependent Care Credit:
1. Care for Qualifying Persons. Your expenses
must be for the care of one or more qualifying persons. Your dependent child or
children under age 13 generally qualify.
2. Work-related Expenses. Your expenses for care must
be work-related. In other words, you must pay for the care so you can work or
look for work. This rule also applies to your spouse if you file a joint
return. Your spouse meets this rule during any month they are a full-time
student. They also meet it if they are physically or mentally incapable of self-care.
3. Earned Income Required. You must have earned
income. Earned income includes wages, salaries and tips. It also includes net
earnings from self-employment. Your spouse must also have earned income if you
file jointly. Your spouse is treated as having earned income for any month that
they are a full-time student or incapable of self-care.
4. Joint Return if Married. Generally, married couples
must file a joint return. You can still take the credit, however, if you are
legally separated or living apart from your spouse.
5. Type of Care. You may qualify for the credit
whether you pay for care at home, at a daycare facility or at a day camp.
6. Credit Amount. The credit is worth between 20 and
35 percent of your allowable expenses. The percentage depends on your income.
7. Expense Limits. The total expense that you can use
in a year is limited. The limit is $3,000 for one qualifying person or $6,000
for two or more.
8. Certain Care Does Not Qualify. You may not include
the cost of certain types of care for the tax credit, including:
- Overnight camps or summer school tutoring costs.
- Care provided by your spouse or your child who is under
age 19 at the end of the year.
- Care given by a person you can claim as your dependent.
9. Keep Records and Receipts. Keep all your receipts
and records for when you file taxes next year. You will need the name, address
and taxpayer identification number of the care provider. You must report this
information when you claim the credit on Form
2441, Child and Dependent Care Expenses.
10. Dependent Care Benefits. Special rules apply if
you get dependent care benefits from your employer.
Keep in mind this credit is not just a summer tax benefit. You may be able
to claim it at any time during the year for qualifying care. IRS Publication
503, Child and Dependent Care Expenses, provides complete details on all
the rules.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
