9 Tax Breaks Parents Can Get for Claiming Kids on Taxes
Does the thought of doing your taxes on top of caring for your kids make your head spin?
Take a deep breath: We found nine tax breaks for parents.
Whether your children are swaddled newborns or seeking college degrees or whether you’re single, married with kids or adopted this year, you’re eligible to get some money back on tax day.
9 Benefits and Tax Credits for Parents
Here are the top tax credits and deductions for parents to keep in mind.
1. Out-of-Pocket Medical Expenses Related to Pregnancy
If you had a baby last year, paid out of pocket for medical expenses during your pregnancy and were never reimbursed, you’ll be able to itemize those amounts as deductions.
As of 2022, this tax code requires the expenses exceed 7.5% of your adjusted gross income. That might seem unreachable, but since you’ll be billed item by item for prenatal care and childbirth, it can start to add up.
2. Child Tax Credit
As soon as your child is born, you’re eligible for the Child Tax Credit, which pays up to $3,600 for every child under the age of 17, depending on your income.
This might seem obvious, but it’s important to note: Even if your child is born on Dec. 31, you can still claim them for that year.
The credit is between $2,000 to $3,000 per child for children between the age of 6 and 17, and from $2,000 to $3,600 for children under the age of 6. All working families will get the full credit if they make up to $150,000 per couple or $112,500 for a single-parent family.
3. Adoption Tax Credit
The adoption process is notorious for being lengthy and expensive.
The Adoption Tax Credit is worth up to $14,890 per child to help you alleviate that financial strain. This credit covers adoption fees, court costs and attorney fees, travel expenses and related expenses.
4. Earned Income Tax Credit
If you earned income last year but didn’t exceed certain thresholds, you may qualify for the Earned Income Tax Credit, which can significantly reduce your tax bill.
The income limits depend on your filing status and how many children you have. For example, if you’re filing as single or head of household and have one qualifying child, you must have earned less than $43,492. If you’re filing jointly with your spouse and have three qualifying children, you must have earned less than $59,187.
The maximum amounts of credit vary slightly each year. For the 2022 tax year, the maximum amounts of credit were:
- $6,935 for three or more qualifying children
- $6,164 with two qualifying children
- $3,733 with one qualifying child
Note: You can also qualify for the Earned Income Tax Credit without having a child.
5. Child Care Tax Credit
The cost for center-based daycare for one child can range anywhere between $221 per week for a family care center to $226 per week for a daycare or child care center, according to a 2021 survey by Care.com.
If you’re paying for child care, you may be able to get a chunk of that back on your taxes.
If your child is younger than 13 years old and you pay for child care while you’re either working or looking for work, you qualify for the Child and Dependent Care Tax Credit. According to the IRS, the amount of the credit varies. It is a percentage based on the amount of work-related expenses you paid to a care provider for the care of a qualifying individual.
In 2022, the amount of expenses you can use to calculate the credit can be no more than $3,000 for one qualifying individual and no more than $6,000 for two or more qualifying individuals.
If you are worried about making mistakes when filing, we highly recommend using tax software like TurboTax or H&R Block.
6. Head-of-Household Status
If you’re single and have a child, don’t overlook this crucial item: your status.
If you file as a head of household, you’re automatically eligible for a lower tax rate than if you file as single.
To be considered the head of household, you must:
- Be unmarried or considered unmarried on Dec. 31.
- Contribute more than 50% of the financial support of the household.
- Have a dependent who lives with you for more than six months of the year.
We have more details about head-of-household status affects plus answers to frequently asked questions
7. American Opportunity Tax Credit
During the first four years of your child’s college education, you can claim up to $2,500 for tuition and related expenses under the American Opportunity Tax Credit.
Your child must attend college at least part time. The income threshold for individual parents is $80,000; married couples must earn no more than $160,000.
8. Lifetime Learning Credit
Unlike the American Opportunity Tax Credit, there is no limit to the number of times you can claim the Lifetime Learning Credit for education costs to lower your tax bill.
Worth up to $2,000, the LLC covers tuition and related expenses.
To qualify, your modified adjusted gross income must be less than $90,000 (or $180,000 if you’re filing jointly with your spouse).
Note: You can’t claim the AOTC and the LLC for the same person in a single year. Also, the AOTC is per student, while the LLC is per family.
9. State Tax Credits for Parents With Kids in Elementary or High School
Some states offer benefits for certain items or activities during the school year.
In Arizona, for example, if your kids attend public school, you’re eligible for a tax credit for any fees related to extracurricular activities, including sports equipment or uniforms. You can even qualify for the credit if you spent money on their SAT/ACT tests or prep classes.
While it won’t affect your federal return, you should check to see if your state offers any tax credits, before filing your state taxes.
Other Parent-Child Tax Items to Consider
Ask yourself two more questions before filing your return, putting up your feet and enjoying a well-deserved break.
Which Parent Should Claim the Child?
A tricky part of being separated or divorced is figuring out who is supposed to claim the child on their tax return.
To make the call, the IRS typically looks at where the child sleeps for more than half the year, but there are some special exemptions as to who can claim the child and when.
It gets a bit tricky, but this IRS chart answers a variety of questions you might have.
Does Your Child Work?
If your child has a job, make sure they file their own tax return.
Teens who work while in school usually don’t make enough money to have a liability. So, even though their employers have likely withheld taxes throughout the year, they’ll get them back in a refund check, which is a nice incentive.
Plus, it’s a great way to continue teaching them about money.
Contributor Michele Becker is a Boston-based writer who specializes in food, as well as Italian travel and history.