Tax Benefits for Having Dependents

Family

Kids can be overwhelming when they are cooped up in the house in the wintertime, but they are also blessed tax-savers when you file your tax return this time of year. Here are some of the tax benefits for having children and other dependents:

Young Family Having Fun In Park

Dependency exemption. In 2012, you can claim a personal exemption deduction of $3,800 for each child and other dependent, and for 2013 that increases to $3,900. Those exemptions reduce the portion of your income that is subject to federal tax. If you are in the 15% bracket this will save you $570 for 2012, and at 25%, $950 in 2012. The higher your tax bracket, the more each dependency exemption saves you.

Child Tax Credit. You may also be eligible for a tax credit, which is even better than a deduction, since it reduces your taxes dollar for dollar. The Child Tax Credit is an additional $1,000 credit you may be able to claim for children under 17. For married couples with income over $110,000 or $75,000 for a single parent, the credit phases out.

Child and Dependent Care Credit.  Child care is expensive, but Uncle Sam can help you out with the cost. If you are working or actively seeking work and you pay child care for your dependent who is under age 13, you can claim the Child and Dependent Care Credit.

This credit is a dollar for dollar reduction of your taxes, based on your child care expenses up to 35% of $3,000 for one child or $6,000 for two or more children. The credit ranges from 20 to 35 percent of your child-care expenses, depending on your income.  Nursery school, private kindergarten, after school programs and day care are all qualifying expenses.

Earned Income Tax Credit. There’s a special credit available if your wages and self-employment income fall below a certain level. How much you can earn and qualify for the credit depends on how many dependent children you have.

For 2012, if you have three or more children, you can earn up to $45,060 and qualify. With just two children, that drops to $41,952. Only one child, your earnings and adjusted gross income can’t top $36,920. The refundable tax credit you can receive ranges from a maximum of $5,891 if you have three children, to $475 if you have no children. Unlike other tax credits, the earned income credit is refundable, so if the credit is greater than the tax you owe, the IRS will send you the difference.

So next time the kids are driving you crazy, remember the tax savings and give them a big hug instead.

Don’t forget that TurboTax will help you get all of the tax credits and deductions you’re eligible for so you keep all of your hard-earned money.

Comments (25) Leave your comment

  1. Hi. I been working at my job for over a year and this year im having my first child will i be able to claim her an if so how much do u think ill get back. I went from working 30-40 hour a week to 10-15 because im pregnate an she is due dec 3.

  2. I live with my family and I have a 17 year old little brother and a 13 year old little sister. I am single and would like to claim them. I normally pay about 30-40% in taxes on my paychecks? Do I get a tax break for claiming those 2?

  3. I have 2 kids and disable husband that doesn’t work and I am self contractor working part-time for an interpreting company and they don’t withhold taxes of my paycheck, so my question is: can I claim my kids and husband as dependents? do I still have to pay taxes?

  4. I may have to get guardianship of my 3 nieces and 1 nephew. I already have a little one of my own as well. Im the only source of income because my sons mother does not work. I make right around 200,000 a year. Since I am over the child tax credit limit as far as income goes will I be able to get any break on taxes with having 4 extra dependents?

  5. I have a question. I started a job 3 months ago. I claim 3 dependants. 2 kids that are 2 and 5 and my husband . I make min wage at 8.25/8.55. I only work between 16-29 hours a week. My husband says I can get 1000$ Back for each dependants. Is that statement true?

  6. I cashed in approximately $25,000 in stock at the beginning of the year for wedding and honeymoon expenses. We got married in January and I have not changed my withholdings to married. I make approximately $85,000 a year. Is there going to be a big difference in my monthly net income when I change to married? With the marriage came two children. Should I put them on my monthly withholdings as well?

  7. I’m a single mom going to get married soon.. I know I get pretty much for being a single parent of two..if I get married will I still get close to that amount back or will it cut back?

    1. Hi Ash,
      It depends on how much money you and your spouse make. You may be eligible for lower tax rates when filing married filing jointly, however when two married people both earn a high income they may see greater tax liability. You can use TurboTax TaxCaster to see what your tax situation will be.
      Thank you,
      Lisa Greene-Lewis

  8. I have 2 children and was claiming 0 on w4. Did not get much back. Should I be claiming 3 for wife and 2 children or leave at 0 to get bigger return?

    1. Hi David,
      I don’t know what your other deductions are, but if you claim more less will be taken out of your paycheck so you are getting the money in your paycheck instead of a refund. If you like to see a refund then claiming 0 would give you the maximum deduction from your paycheck giving you a bigger refund depending on your situation.
      Thank you,
      Lisa Greene-Lewis

  9. I have a question for next year. I have a temporary contract job but salary-wise it pays LESS than the cost of childcare.
    For 2013 I OWED a LOT in taxes due to a similar situation.
    How is it, if my income is technically NEGATIVE, that I can still owe taxes?. I don’t mind owing taxes if my income were higher (hopefully soon!)
    Do I fall into some odd crack/loophole? The Self Employment tax is what kills me.

    1. Hi Greta,
      Yes, there are a couple of things that can cause this:
      1) The Child and dependent care credit is not dollar-for-dollar what you paid. For instance, if you paid $6,000 for childcare for one child for the year you may expect to get a $6,000 credit, but you get up to 35% of $3,000($1,050) and the percentage depends on your income. This tax benefit may also be phased out at certain income levels.
      2) The additional self-employment tax of 15.3% may also be impacting your taxes.
      3) Make sure you took advantage of other credits for your child like the Earned Income Tax Credit and the Child Tax Credit. These can help.
      4) Also, keep in mind that the Child and dependent care credit is not refundable so you cannot receive a credit that is more than your tax.
      Thank you,
      Lisa Greene-Lewis

  10. Can i receive some,if any,tax money even though i have not worked or have a current dependent?May i claim myself only?

    1. Hi Chris,
      If you don’t have any income you would not need to file and would not be eligible for refundable credits like the Earned Income Credit since you have to have earned income.
      Thank you,
      Lisa Greene-Lewis

  11. This year i claimed unemployment half the year the other half worked but got 1099misc where do you fill out that part of income also im married with 4 dependants why will it only allow me to claim 3 of them when 4 qualify would it be better to claim seperate from wife even though she had no income

  12. Its my first time filing taxes and i filed with Turbo Tax..it gave me the amount for federal and state refunds..i want to know if i claimed 2 of my kids..is the amount separate from the federal and state or do the IRS approve for the amount i get for each child to be added with my federal and state refunds??please help..first timer

  13. I’m married my husband didn’t work and I made around $52,000 I have five children their dad wants to carry two of them on his taxes and he’s telling me I only need to carry 3 dependents. I think letting him carry 2 of the kids will affect my tax bracket. Is this true that only 3 dependents matter especially since I’m in a higher bracket

  14. If i only worked half the yr and only made 6,000 claimed 5 got 2 kids claimed head of household…. will i qualify for earned income credit for my kids?

  15. I am unsure of your overall situation or if you have filed your taxes in prior years. It more than likely was due to 1. Your income earned. . If you made LESS money than before it could lessen your refund as easily as earning MORE income this tax year. If you had more income that you did not report, you have 3 years to file an amended return to include all income earned.
    2. With holdings could have impacted your refund. Your with holdings could have been less than in previous years. Changing the number of exemptions on your W4 form such as adding a child or getting married and including the spouse for with holding can affect this. 3. The number of exemptions that you claimed has decreased. These are all reasons and I hope that it has helped.God bless you.

  16. Diane, no
    Melissa, That is the difference between the credit and the deduction. It depends on how much income you reported
    Aretha, who knows?

  17. I would like to claim my 82 year old mother as a dependent. She only receives her Social Security check, but she does have a savings account of $50,000.00 Will her savings account make a difference in me claiming her??

  18. I was told that people will receive the difference in cash for the credit of the child. For example, a person did not work and has 3 children, they received thousands from their taxes simply for having children. Is this true?

    1. I have prepared taxes for 13 years now. You have to have income to file a tax return and the thousands of dollars in refunds must be the EITC EARNED Income Tax Credit. You have to have earned income to receive a refund from this credit. It is based on several factors including number of dependents, income earned, filing status and even with holdings from W4 (s) ect. Not everyone’s taxes are the same but you do not get one dime for simply having children. I hope that this helps some. God bless and have a wonderful day.

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