Tax Benefits for Having Dependents

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This post can be found en Español here.

Kids can be overwhelming when they are cooped up in the house when spring or summer breaks come up, but they are also blessed tax-savers when you file your taxes. Here are some of the tax benefits for having children and other dependents:

Dependency exemption. You can claim a dependent exemption deduction of $4,050 for each child and other dependents for 2016 ($4,000 for 2015). Those exemptions reduce the portion of your income that is subject to federal tax. If you are in the 15% bracket this may save you $607.50 for 2016, and at 25%, $1,1012.50 per dependent. 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 tax 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 (no age limit if disabled), 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 ($1,050) for one child or $6,000 ($2,100) 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 tax credit available if your wages and self-employment income fall below a certain level. How much you can earn and qualify for depends on how many dependent children you have.

For 2016, if you have three or more children, you can earn up to $47,955 ($53,505 married filing jointly) and qualify. With just two children, that drops to up to $44,648 ($50,198 married filing jointly). Only one child, your earnings and adjusted gross income must be less than $39,296 ($44,846 married filing jointly). The refundable tax credit you can receive ranges from a maximum of $6,269 if you have three children, to $506 if you have no children. Unlike other tax credits, the Earned Income Tax Credit is refundable, so if the credit is greater than the tax you owe, the IRS will still 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 worry about knowing these rules. TurboTax will ask you simple questions and give you the tax deductions and credits you’re eligible for based on your answers.

Comments (77) Leave your comment

  1. I would like to know approximately how much I would be getting back with three dependents. I have a 6 and 5 yr. old daughter and my husband who is a stay at home dad. Thank you

    1. Hi Astrid,
      It depends how much money you earned and how much you had withheld from your taxes. I can tell you you will get dependent exemptions of $4,050 for each dependent and a $4,050 personal exemption for you and you husband. You also will get the child tax credit worth $1,000 per dependent, and you may be eligible for the earned income tax credit.
      Thank you,
      Lisa Greene-Lewis

    1. Hi,
      Congratulations! In order to claim your baby for 2016 she would have to be born by December 31, 2016. You can claim her on your 2017 taxes. Make sure she has a valid social security number so you can claim her and also get the tax deductions and credits you are eligible for. TurboTax will ask you simple questions about you and give you the tax deductions and credits you deserve based on your answers.
      Thank you,
      Lisa Greene-Lewis

  2. Hello, I was wondering if you can tell me an estimate of how much do I get back per dependent one is 10 and the other one is 15 and 16

    1. Hi Erika —

      There is no way to tell you how much you get back per dependent since your refund depends on so many other factors: your marital status, income, deductions, child care expenses, etc. You can begin your return with TurboTax. As you begin to enter your information you will begin to see the amount of your refund or how much you owe. Be aware that this amount will change as you enter more items. Begin your online return here:

    1. Hi Courtney,
      Yes, even if she was born on December 31 she can be claimed as your dependent. Make sure you have her social security number when you file so you can get the tax deductions and credits for dependents.
      Thank you,
      Lisa Greene-Lewis

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