It's no secret that having children is costly but parents can actually enjoy a few tax breaks from supporting dependents. When the average cost of raising children up to the age of 17 is about $233,610, it's not surprising to have parents wanting a tax relief.
Parents must know that they can get tax exemptions for their dependents under the age of 19 or 24, if that child is still a full-time student. They can also get exemptions for supporting a disabled relative, elderly parents or grandchildren.
Every household can avail of a reduced taxable income at $4,050 per person. So, for a family of four, the reduced taxable income is $16,200, per Yahoo Finance. To avail of this deduction, however, there is an income cap. It's $311,300 for married filers and $259,400 for single filers.
Parents can also avail of the Child Tax Credit. Under this provision, every child supported by the parents equal to $1,000 credit. This works best for middle or low-income earners whose yearly income is from 75,000 (single parent) or $110,000 (couples) and not high-income earners, according to US News.
Child Tax Credit is not refundable, however, and parents do not actually get a cash back but it can round up tax liabilities to $0. For a tax refund, parents might want to consider filing for Additional Child Tax Credit, for those who receive less than the full amount of the $1,000 from the Child Tax Credit.
Parents can also get a cash back for filing the American Opportunity Tax Credit or the Lifetime Learning Credit. It's for those with children in college or university.
Parents, however, have to take note of the different forms in relation to these tax refunds and one cannot claim both credits at the same time. Filing these needs careful accounting and paperwork, so make sure to go over this carefully before sending the documents to the IRS.
