Even though their love has no price tag, kids can get expensive! Between housing, food and childcare/education, the cost of raising a child is between $15,000 and $17,000 annually. Yikes! And this is only through age 17. Expect to spend even more if you plan to send them to college. Fortunately, your dependents can potentially save you thousands of dollars at tax time. The easiest way to find out which tax breaks you qualify for is to do your taxes with ezTaxReturn.com. Here are some money-saving tax credits for parents.
Child Tax Credit
For tax year 2022, the Child Tax Credit is worth up to $2,000 for each qualifying child or dependent under age 17. To receive the maximum credit, your modified adjusted gross income (MAGI) must be:
- $200,000 or less for single filers and married filing separate
- $200,000 or less for head of household
- $400,000 or less for married filing jointly
If your income exceeds these amounts, your credit will be reduced by $50 for each $1,000 of income exceeding the limit amount until it reaches zero. The Child Tax Credit is considered a partially refundable credit which means it can reduce the amount of taxes owed. For any amount remaining, you can receive a refund up to $1,500 which is known as the “additional child tax credit”. Please note, a tax credit decreases your tax bill. For example, if you owe $4,000 and you are able to receive a $2,000 tax credit, your tax bill will decrease to $2,000. As opposed to a tax deduction which decreases your taxable income.
For the 2022 Child Tax Credit, your child must meet the following criteria found here. To claim the credit, fill out Form 1040 or 1040-SR. A schedule 8812 must also be completed (Credits for Qualifying Children and Other Dependents) to calculate the amount of the credit and any additional child tax credit. Our ezTaxReturn software provides ez step-by-step guidance in claiming the child tax credit! You may even be qualified for a FREE federal return.
Credit for Other Dependents
An increasing number of young adults are still living at home. This is not surprising with many facing major debt and recovering from a recent global pandemic in a tough economy and housing market. If you have an older dependent who doesn’t qualify for the Child Tax Credit or Additional Child Tax Credit, you may be able to claim the Credit for Other Dependents. It is worth up to $500 per dependent. However, your credit may be reduced if your MAGI is more than $200,000 ($400,000 for married couples filing jointly).
Child and Dependent Care Credit
Childcare is one of the most expensive costs associated in raising a child. Parents who pay someone to watch their kids while they go to work may be eligible for the Child and Dependent Care Credit. For 2022, eligible taxpayers can claim up to $3,000 of childcare expenses for one qualifying individual and $6,000 for two or more qualifying individuals. The maximum credit is worth 35% of the related expenses. This is determined by your income and the amount of related expenses necessary for the care of your dependent. To qualify for the credit, your dependent must be a child aged 13 or younger, or a dependent of any age who is incapable of caring for themselves and lives with you for longer than half a year.
Earned Income Tax Credit
If you didn’t make a lot of money in 2022, you may be eligible for The Earned Income Tax Credit (EITC). You must meet the thresholds for the adjusted gross income (AGI) to qualify. See the IRS EITC tables by year here. The maximum credit varies based on the number of dependents you have. Taxpayers with 3 or more children get the biggest piece of the pie, they can get up to $6,935. Those with 2 kids can receive up to $6,164, while those with only one child can get up to $3,733. Childless workers can get up to $560. Here is the adjusted gross income (AGI) limit for the EITC.
2022 EARNED INCOME TAX CREDIT
| Children Claimed | Single, Head of Household, Widowed or Married Filing Separately | Married Filing Jointly |
| Zero | $16,480 | $22,610 |
| One | $43,492 | $49,622 |
| Two | $49,399 | $55,529 |
| Three or more | $53,057 | $59,187 |
Your investment income must also be $10,300 or less. Use ezTaxReturn to claim the EITC and any other credits and deductions you deserve. It’s fast and ez to file your federal and state returns in just 30 minutes.
American Opportunity Tax Credit
Being able to send your kids to college is part of the American dream, but it comes with a hefty price tag. For the 2022-2023 school year, the average annual cost of tuition and fees at a private four-year university is $39,723. Public out-of-state tuition is reaching almost $23,000 in costs annually. However, you can recoup some of these costs when you do your taxes. If you paid for tuition, books or supplies for your child, you may qualify for the American Opportunity Tax Credit for the first four years of their college. You can be eligible for $2,500 for each qualified student in your household. This credit is partially refundable, so that means if it brings your tax bill down to zero, then you can have the remainder as refundable (up to $1,000). To be eligible, your child must be pursuing a degree, be enrolled at least part time during their first four years of college and have no felony drug convictions.
Lifetime Learning Credit
The Lifetime Learning Credit (LLC) is worth $2,000 per tax return and is available for students who paid for qualified expenses. These expenses include tuition, school supplies and enrollment fees. Undergraduates, graduates and those taking professional degree courses at an eligible educational institution are eligible. The credit can be claimed for an unlimited number of years.
Not sure which credit is right for you? We make it ez with step by step guidance and FREE customer support. File now with ezTaxReturn.com!
