Common Tax Credits You Can Claim If You Have Children


Living in today’s world can be quite expensive, especially if you have children. But, one time when you might actually save a little money because of your kids is during tax time. That’s because there are both federal and state tax credits that are either only available to taxpayers with children or pay out more money to taxpayers with children. Some of these common tax credits for taxpayers who are parents or guardians of children are listed below.

Federal Earned Income Tax Credit (EITC)

The EITC is a federal tax credit given to taxpayers who have low incomes in order to encourage them to continue working. It got its start in 1975, but it has been adapted and expanded over the decades. Although the current EITC can be given to single taxpayers or couples without children, you can get a larger refund if you happen to have a child. If you have more than one child, then the amount you can collect under the EITC will be even higher. However, the exact amount of each level of credit can vary from one year to the next.

An EIC schedule for interested taxpayers is attached to 1040 tax forms. If you are interested in filing for the refund, then you simply have to fill out that schedule with information such as how many children you have, the name and age of each child and whether or not any of your children are disabled or were incapacitated temporarily for any part of the tax year.

You can even qualify for an extra EITC tax credit in some cases if your children are as old as 23. However, any children over 18 have to have been enrolled as students during the year in question to qualify. The exact age ranges and credit amounts are also subject to change each year.

Federal Child Tax Credit (CTC)

The CTC is a tax credit that is specifically meant to reimburse you for some of the cost of having kids. For the 2016 tax year, you can get up to $1,000 per child back through the CTC. However, that amount is subject to change.

In order to qualify for the CTC, there is certain criterion that your child has to meet. First of all, the child must be your own child, a dependent sibling, or your niece, your nephew, your grandchild or a similar relative. Adopted and foster children do count, and so do stepchildren. You will also have to provide proof of the child’s citizenship, residency and age.

The exact amount of your CTC credit will depend on the tax bracket you are in and other factors, but it cannot exceed the amount that you owe. If it does, then your entire tax debt will be canceled, but no extra money from the CTC will be given to you.

Federal Adoption Tax Credit (ATC)

The ATC is a tax credit related to adopting children, but you won’t qualify for it unless you recently adopted a child. ATC isn’t an ongoing reimbursement; it is only meant to offset the legal fees, travel expenses and other costs associated with finalizing the adoption. Therefore, your child must have been adopted during the year for which you are filing.

In order to apply for the ATC, you must fill out required forms and attachments that you can only get with a standard 1040 tax form. The 1040A and 1040-EZ forms do not include the required documentation. You also have to provide proof that the adoption, itself took place, along with proof of the expenses you incurred to the best of your ability.

Federal and State Child and Dependent Care Credit (CDCTC)

The CDCTC applies if your children are 12 years old or younger and you are paying for them to receive care while you are at work or while you are unemployed and seeking new employment. The exact amount of the credit was capped at $3,000 for 2016, and varies depending on how much you paid for child care during the tax year, what your income level is and how many children you have in daycare or that are being babysat for money in some way, such as by a family member, a neighbor or a friend.

In addition to the federal CDCTC, the state of Georgia also has its own CDCTC. In 2016, the federal CDCTC covered as much as 35 percent of daycare costs. Georgia provided up to 30 percent of whatever federal CDCTC credit was earned in 2016, but capped the maximum refunds at different amounts, depending on the number of children that each taxpayer applying claimed. Note that the percentages and caps for both Georgia’s state CDCTC and the federal CDCTC can change annually.