Taking care of Kids or dependents can be a challenge. However, they bring tax benefits come tax time. Learn about these tax benefits here.
Taking care of kids or dependents can be stressful at times. However, kids or other dependents bring tax benefits you can take advantage of come tax season. With these tax deductions and credits, you can save something when paying your taxes or even get a tax refund if your withheld taxes plus the credits are more than what you owe the IRS. To enlighten you, here are the tax deductions for having dependents and how you can claim them in the coming tax season.
Child & Dependent Care Tax Credit
Paying for childcare or dependent care can be very expensive. For that reason, the IRS offers Child & Dependent Care Credit to help you pay for dependent and child care. Having someone to take of the dependent allows you to go to work, look for work or even go to school. There are set terms to qualify for this credit, but if you qualify, 20%-35% of your childcare or dependent expenses can be reduced. But this will depend on your income, and filing status.
Earned Income Tax Credit
This tax credit is available to self-employed tax payers and W-2 employees. The tax credit is to help low to moderate income families live better lives with their children. Even if you don’t have a child, you can get a tax credit worth $538. However, the credit amount will depend on your income, size of your family and filing status. A family with 3 or more qualifying children can get up to $6,650, while a family with one qualifying child can get a maximum of $3,584. This tax credit is refundable and will reduce your tax dollar for dollar. Therefore, it should be on your list of tax credits and deductions you should claim come tax period if you qualify.
Child Tax Credit
This is another tax credit for dependents you should take advantage of. If you have a qualifying child, you can claim up to $2,000 per eligible child. However, this credit is available to taxpayers earning a certain amount of income.
How to calculate tax deductions and credits for dependents?
Tax calculations are complicated. However, with a tax deduction calculator for dependents, these calculations are pretty simple. You just need to provide essential information, and the tax calculator will do the rest for you. The calculator will give you accurate figures, and you will know either you will pay a tax bill or get a tax refund after filing your tax returns.
How to File Your Taxes – the Smart Way
If you want to file your taxes easily, and include all tax deductions and credits for dependents, try online tax filing. If you use H&R Block or TurboTax, you just need to answer a few questions, provide essential information and the software will do the rest for you. In addition, online tax filling is accurate and fast.