Raising children can be expensive but luckily they provide some nice tax benefits during tax time. Below are 5 tax credits and tax deductions that may be helpful towards you.
The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child under the age of 17 depending upon your income. The credit is intended to offset the cost of raising children. You must file Form 1040A e-file it or Form 1040 e-file it to claim the credit (you cannot claim the Child Tax Credit on a 1040-EZ).
The Child and Dependent Care Tax Credit is a tax credit that helps working families pay expenses for the care of children, and adult dependents. This credit can be worth up to 35% of expenses you paid to the care provider, based on your yearly income and the number of children. The maximum credit for is $3,000.
If you have paid interest on a loan that was taken out for your child’s educational fees, you can take advantage of the student loan interest deduction. If you decide to claim this deduction, you could reduce your taxable income by up to $2,500 of the student loan interest you have paid.
You are paying education-related fees for your child’s education maybe able to quality for you may be able to claim a tax deduction of up to $4,000 for qualifying tuition and fees dependent. You may deduct any qualified expenses up to $4,000, even if you paid the tuition and fees with a loan.
IRS allows you a dependent tax exemption ($4,050 per person in 2016; $4,000 in 2015) to cover basic living expenses. You will receive this additional tax deduction every year until your child turns 19.