Tax Credits and Deductions For Parents
The more children you have, the greater your tax savings. And the more children you have, the bigger your tax savings.
Uncle Sam offers many tax benefits for families, but understanding which ones you qualify for can be as tricky as deciphering your kids’ math homework. Here are some popular tax credits and deductions that families may be eligible to claim in 2019. Earned Income Tax Credit
Each year, millions of taxpayers fail to claim the Earned Income Tax Credit, even though they are eligible.
If you and your family earn less than $66,819 by 2024, this credit could be worth as much as $7,830, depending on your income and the number qualifying children. The credit reduces your tax bill, and any remaining balance will be given to you as a refund. You can claim the EITC in 2025 if you earn under $68,675. The maximum tax credit is $8,046.
2. Child and Dependent Care Credit
This tax credit covers a variety of care options, including nursery school, preschool, before and after school care, day camps, (excluding overnight camps), in-home nanny services, and more. The value of the credit depends on your adjusted income and can reach up to 35%. You can claim up $3,000 for a dependent or $6,000 if you have two or more. Child Tax Credit
The Child Tax Credit is worth up to $2,000 per qualifying child if your 2024 modified adjusted gross income (MAGI) is less than $400,000 for those married filing joint returns or $200,000 for all other filing statuses. Child Tax credit
The Child Credit is worth $2,000 per child if you have a 2024 modified adjusted Gross Income (MAGI) of less than $400,000 if you are married filing jointly or $200,000 if you do not. If you receive less because the credit eliminates the tax bill, you might qualify for the refundable part of the credit, called the Additional Child Credit, which currently is worth up $1,700 for 2024 and 2025. Medical and dental expenses
If the unreimbursed medical or dental expenses of your family in 2024 and 2025 exceed 7.5% your AGI, then you can claim that amount as an itemized deduction. The expenses must be for the diagnosis or treatment of a disease or condition, as well as for its mitigation, prevention, or treatment. Transportation costs for medical care and transportation premiums for dental, medical, or long-term care coverage may also qualify. Over-the-counter medications and prescription medication are not eligible medical expenses. Adoption Credit
Depending on your modified-adjusted gross income (MAGI), the Adoption Credit can cover up to $17.280 in adoption costs for 2025. This is an increase from $16,810 for 2024. You can claim the entire credit if your MAGI in 2025 is less than $252,150 ($259,190 in 2010). After this, the credit amount starts to decrease. If your MAGI is over the threshold, you will not be able to claim the credit.
Qualified adoption expenses include court costs, adoption agency fees, attorney fees, and travel expenses (including meals). The credit is not refundable at this time, meaning it is limited to the tax liability you owe for the year. If your credit exceeds what you owe in taxes, you will not be able claim the excess amount as a refund.
6. Qualified tuition plans and Coverdell Education Savings Accounts
If your intention is to create a college fund for a child, certain education savings plans such as qualified tuition plans (also known as 529 plans) or Coverdell Education Savings Accounts offer tax benefits. These accounts allow for a portion of earnings and distributions to be tax-free, as long as the funds are used for qualified educational expenses. Student loan interest deductions and education tax credits
Does your child have to go to college? You may qualify for the student loan interest deduction, American Opportunity Credit, or Lifetime Learning Credit. These can all help offset the cost of higher education expenses. The bottom line
Having more children comes with some tax benefits. TaxAct(r), however, is here to help you. We’re here to help you determine what deductions and credits you may qualify for so you can keep more of your hard-earned money right where it belongs — in your family’s hands.
This article is for informational purposes only and not legal or financial advice.
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