The children of taxpayers may help qualify for valuable tax benefits. Here are eight tax benefits parents should look for when filing their federal tax returns this year.
Dependents. In most cases, taxpayers can claim a child as a dependent. This applies even if the child was born anytime in 2013. For more details, see Publication 501, Exemptions, Standard Deduction and Filing Information.
Child Tax Credit. Taxpayers may be able to claim the Child Tax Credit for each of the taxpayers qualifying children under the age of 17 at the end of 2013. The maximum credit is $1,000 per child. If the taxpayer qualifies for less than the full amount of the credit, the taxpayer 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. Taxpayers may be able to claim this credit if they paid someone to care for one or more qualifying persons. The taxpayer’s dependent child or children under age 13 are among those who are qualified. Taxpayers must have paid for care so they could work or look for work. For more, see Publication 503, Child and Dependent Care Expenses.
Earned Income Tax Credit. If a taxpayer worked but earned less than $51,567 last year, the taxpayer may qualify for EITC. If the taxpayer has three qualifying children, the taxpayer may get up to $6,044 as EITC when the taxpayer files and claims it on their tax return. Use the EITC Assistant Tool at www.irs.gov to find out if the taxpayer qualifies or see Publication 596, Earned Income Tax Credit.
Adoption Credit. Taxpayers may be able to claim a tax credit for certain expenses paid to adopt a child. For details, see the instructions for Form 8839, Qualified Adoption Expenses.
Higher education credits. If a taxpayer paid for higher education on their own behalf or for an immediate family member, the taxpayer 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 the taxpayer owes. If the American Opportunity Credit is more than the tax owed, the taxpayer could be eligible for a refund of up to $1,000. See Publication 970, Tax Benefits for Education.
Student loan interest. Taxpayers may be able to deduct interest paid on a qualified student loan, even if the taxpayer does not itemize deductions on their tax return. For more information, see Publication 970.
Self-employed health insurance deduction. If the taxpayer was self-employed and paid for health insurance, the taxpayer may be able to deduct premiums paid to cover a child under the Affordable Care Act. It applies to children under age 27 at the end of the year, even if not the taxpayer’s dependent. See Notice 2010-38 for information.
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