If you have children, you may be entitled to beneficial tax credits. There are a few credits that are specifically targeted towards parents, and can be extremely helpful when it comes to saving money or offsetting the costs of raising children.
In most scenarios, you can claim your child as a dependent, including children just born in the current tax year. The following credits are available for parents who meet the qualifications:
Child Tax Credit: For every child under the age of 17 by the end of the tax year that you claim as a dependent, you may be eligible to claim the Child Tax Credit. The total credit amount is $1,000 per child, however if you receive a lower amount, you may qualify for the Additional Child Tax Credit.
Child and Dependent Care Credit: If you have paid another party for the care of a qualifying person, you may be able to claim this credit. This benefit applies to any child care expenses for a child under the age of 13, which was incurred while you were working or looking for work.
Earned Income Tax Credit: For those who earned less than $52,427 in 2014, there’s a tax credit that may be especially beneficial to working parents. Parents with three eligible children can earn up to $6,143 in credit under the Earned Income Tax Credit, which has to be claimed on a return.
Adoption Credit: For parents who have adopted a child during the tax year, there is a credit to claim some of the expenses incurred.
Higher Education Credits: There are two separate education credits post high school that can help reduce the cost of higher education. If you’ve paid for the expenses to attend college for either you or a dependent, you may be eligible to receive either the American Opportunity Credit or the Lifetime Learning credit. Both can reduce the amount you may owe in federal taxes, and the American Opportunity Credit is refundable up to $1,000.
Student Loan Interest: You can deduct interest paid on certain student loans without having to itemize all your deductions separately on your return.
Health Insurance for Self-Employed: If you paid for your own health insurance because you are self-employed, you can deduct premiums you’ve paid for any child under the Affordable Care Act. All children under age 27 are applicable even if they aren’t claimed as a dependent.