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5 Top Tax Breaks for Parents

child tax credit

Raising a child is expensive, but when tax season comes around, you may be able to catch a break. Below are 5 tax credits and deductions you can claim on your tax return because of your dependents, if you qualify for them.

5 Tax Credits & Deductions to Claim for Parents

1. Child Tax Credit

For most parents, the child tax credit is the single biggest tax break they will receive for having a child. In order to be eligible for this credit, your child must be under age 17 at the end of the tax year. If they are, as of 2019, you can receive a credit worth up to $2,000 for each qualifying child with a refundable portion of up to $1,400.

2. Earned Income Tax Credit

The Earned Income Tax Credit (EITC or EIC) provides a subsidy for low-income working families. Unlike many credits, it is refundable, meaning you can get back more from the credit than you pay in taxes. To claim this tax credit, you must meet certain eligibility requirements, such as your investment income must be $3,400 or less. The child also must have a Social Security Number and meet certain relationship, age, and residency tests. To receive your EITC credit, you must file an income tax return (even if you aren’t required to file or you owe zero tax).

For tax year 2019, the maximum credit is:

  • $503 with 0 qualifying children
  • $3,359 with 1 qualifying child
  • $5,548 with 2 qualifying children
  • $6,242 with 3 or more qualifying children
  • $503 with 0 qualifying children
  • $3,359 with 1 qualifying child
  • $5,548 with 2 qualifying children
  • $6,242 with 3 or more qualifying children

3. Childcare Tax Credit

If you bring your child 13 or under to daycare so that you can work, you can claim a credit for up to 35% of your childcare expenses depending on your income. The dollar limit on the amount of expenses you can claim is $3,000 for one qualifying child or $6,000 for two or more children. Note that the cost of a babysitter doesn’t count as an expense if they were hired for a night out. However, babysitter costs are eligible for this tax credit if they were incurred because you had to work. If you want to claim the child and dependent care credit, you need to make sure that you obtain the Social Security Number(s) or Tax ID of your babysitter(s) or the daycare.

4. ‘Head of Household’ Filing Status

If you are a single parent, you may be eligible to file as ‘head of household’ (rather than ‘single’) if you have at least one qualifying person living with you. This has better benefits such as the standard deduction amount is higher for head of household filers and comes with higher income limits for various tax breaks. There are three main criteria for the head of household filing status:

  • You must be unmarried as of the last day of the year
  • You must pay for over half the cost of maintaining a home for the year
  • A qualifying person must live with you for more than half the year

5. Deductions for College Expenses

Paying for higher education expenses is challenging and stressful, even for families that have done a respectable job of saving and planning ahead. The good news is that there are a number of tax benefit provisions that can help ease the burden. For example:

  • The Student Loan Interest Deduction: Generally, you can deduct up to $2,500 for interest which you were legally obligated to pay for a qualified student loan for yourself, your spouse, or your dependents.
  • The Tuition and Fees Deduction: You may be able to deduct up to $4,000 for higher education tuition and fees paid for yourself, your spouse, or your children if you have a modified adjusted gross income of $80,000 annually—or $160,000 when married and filing jointly.

The above special tax breaks for being a parent could boost your refund this year.

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For questions on whether or not you qualify for these tax breaks, please consult a tax professional.

About the author

Kathleen Barrett

As the Director of Marketing at LendingClub, Kathleen has had experience in the financial services industry for over ten years. Ten years ago, while working for a non-profit focused on helping consumers work their way to financial freedom, Kathleen found her passion for financial education. Her current role puts her at the forefront of online banking trends, allowing her to share her expert advice for your personal financial needs.