Raising children is a lot of work, and it can be quite expensive. Fortunately, the government knows this, and accordingly offers a few tax exemptions for parents with young children. It’s important to note that for many of these exemptions, both parents must be working, or the nonworking spouse must be a full-time student or actively looking for work.
The tax benefits available are as follows:
- Child Tax Credit: you can save up to $1,000 off your taxes for every child under the age of 17. It’s worth noting that the child must be claimed as a dependent and must live with you for at least half of the year. Joint-filing couples with incomes above $110,000 or single head of household filers who make over $75,000 are not eligible to claim this credit.
- Child Care Credit: If you were working or looking for work while paying for child care, you may be able to claim a credit between 20-35% of your child care costs. This credit caps at $3,000 per child, or $6,000 for more than a single child. Any child under the age of 13 is eligible.
- Medical Mileage Deduction: children are prone to injury and illness, and trips to the doctor can take up a lot of time. Fortunately all those trips may qualify you for a tax break. As a parent you may be able to deduct mileage, tolls, parking, and other costs associated with taking your child to the doctor. However only illness or emergency trips are deductible; not trips for a regular checkup.
- Dependent Exemption: the dependent exemption reduces your taxable income by $3,900 per child under the age of 19. This exemption can be extended up to the age 24 for full-time students.
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