Sometimes as parents we get overwhelmed with the costs of raising kids. What with the high cost of soccer camp, video games, and lessons on the clarinet, it can be woefully expensive raising kids.
Sometimes though, there are surprising ways that kids can help out with costs – and your income taxes is one of those places where having kids does help. The IRS recently published their Tax Tip 2014-11 which lists eight ways that having children can help to lower your taxes.
The actual text of Tax Tip 2014-11 follows:
Eight Tax Savers for Parents
Your children may help you qualify for valuable tax benefits. Here are eight tax benefits parents should look out for when filing their federal tax returns this year.
- Dependents. In most cases, you can claim your child as a dependent. This applies even if your child was born any time in 2013. for more details, see Publication 501, Exemptions, Standard Deduction and Filing Information.
- Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17 at the end of 2013. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more about both credits, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.
- Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for one or more qualifying persons. Your dependent child or children under age 13 are among those who are qualified. You must have paid for care so you could work or look for work. For more, see Publication 503, Child and Dependent Care Expenses.
- Earned Income Tax Credit. If you worked but earned less than $51,567 last year, you may qualify for EITC. If you have three qualifying children, you may get up to $6,044 as EITC when you file and claim it on your tax return. Use the EITC Assistant tool at www.IRS.gov to find out if you qualify or see Publication 596, Earned Income Tax Credit.
- Adoption Credit. You may be able to claim a tax credit for certain expenses you paid to adopt a child. For details, see the instructions for Form 8839, Qualified Adoption Expenses.
- Higher education credits. If you paid for higher education for yourself or an immediate family member, you may qualify for either of two education tax credits. Both the American Opportunity Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund up to $1,000. See Publication 970, Tax Benefits for Education.
- Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you don’t itemize deductions on your tax return. For more information, see Publication 970.
- Self-employed health insurance deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child under the Affordable Care Act. It appies to children under age 27 at the end of the year, even if not your dependent. See Notice 2010-38 for information.