Tax Benefits for Having Dependents

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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.

Even though the dependency exemption of $4,050 is eliminated under the new tax reform law beginning with your 2018 taxes (the ones you file in 2019), there are still some tax benefits you can take advantage of to maximize your tax refund if you have kids and other dependents.

Child Tax Credit: You may 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 increased to a $2,000 credit for 2018 under the new tax law (it was previously $1,000 for 2017) and is available if you have a dependent child under the age of 17. Under the new tax reform law, the income threshold at which you can claim the Child Tax Credit is raised to $400,000, up from $110,000 for those who are married and filing jointly.

Child and Dependent Care Credit: Childcare is expensive, but Uncle Sam can help you out with the cost. If you are working or actively seeking work, and you pay childcare 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% of your child-care expenses, depending on your income. Nursery school, private kindergarten, after-school programs, and daycare are all qualifying expenses.

Earned Income Tax Credit (EITC): 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 2018, if you have three or more children, you can earn up to $49,194 ($54,884 if you are married and filing jointly) and qualify. With just two children, that drops to up to $45,802 ($51,492 married filing jointly). If you only have one child, your earnings and adjusted gross income must be less than $40,320 ($46,010 married filing jointly).

The refundable tax credit you can receive ranges from a maximum of $6,431 if you have three children, to $519 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 these 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. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your questions answered at tax-time.

Comments (80) Leave your comment

  1. Hi, My kids and wife arrived in USA April 2017. I sent tax return with W7 forms to get dependent benefit. I Received ITIN numbers for my two kids and wife. But i did not receive any dependent benefit. Is it possible to claim kids after Federal tax return.

  2. Why is it that for federal tax filing purposes, my 17 year old is no longer considered to be a dependent but for FAFSA, he’s a dependent until age 26? Can the federal government please make up their minds???!!!

  3. Thank you for sharing this information. This is very helpful for those who are incoming dependents to the family and this will reflect to your total savings. Get an arrangement of your tax credits and maximize your fund refund.

  4. 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

  5. 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: https://turbotax.intuit.com/

    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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