Extension Filers Don’t Forget Your Little Bundle Can Save You a Bundle

As the extension deadline for filing taxes is coming up, don’t feel like you have to rush through your paperwork. On the contrary, there are many reasons you want to review everything to help you with taxes.

If you are a parent, having a little one (or not so little one), can give you some big tax benefits. You may already know that for 2011 you can deduct $3,700 for each dependent as an exemption on your tax return.

However there are a couple more tax credits that all parents should review to save more on your taxes.

Child Tax Credit – $1,000

The Child Tax Credit can be a significant help with reducing your federal taxes. Depending on your income you can claim up to $1,000 per qualifying child.

What defines a qualifying child? There are a few criteria that have to be met:

• Relationship: To claim this credit, biological children, adopted children, step-children, and foster children qualify. Other family members may also qualify.
• Age: Your child(ren) has to be age 16 or younger at the end of 2011.
• Support: Your child must not have provided over half of their own support.
• Residence:  Your child must have lived with you over half of the year.
• Dependent: You have to claim your child as a dependent on your federal taxes.
• Citizenship: Qualifying children include U.S. citizen, U.S. national, and U.S. resident alien.

If you’re using tax software like TurboTax then these factors will be checked as you file your taxes to make sure you get the credit if you qualify.

But the Child Tax Credit isn’t the only tax break you should look at. The Child and Dependent Care Tax Credit can also be a big win for you.

The Child and Dependent Care Tax Credit

If you paid for child care last year, then you may qualify for a tax credit based on your dependent care expenses up to $3,000 for one dependent and up to $6,000 if you are claiming two or more.

To qualify you must also identify the person who provided the care for your child. You and your spouse if filing jointly must have earned income. The child care expenses paid should not be given to your spouse or someone claimed as a dependent on your taxes.

Thoughts on Children and Tax Credits and Breaks

For parents looking at getting their taxes filed, have you looked at the Child Tax Credit and Dependent Care Credit? How much do you qualify for? What credits are you claiming this year?