Tax Benefits for Having Dependents

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The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes (filed in 2020) and 2018 taxes, filed by the April 15th, 2019 (or October 2019 with filed extension) deadline.

Kids can be overwhelming when they are cooped up in the house during summer break, but they are also blessed tax-savers when you file your taxes.

Even though the dependency exemption of $4,050 was eliminated under the new tax 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 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. The income threshold at which you can claim the Child Tax Credit is raised to $400,000 for couples who are married filing jointly and $200,000 if you are single.

If your dependent child is over 17 or you support a relative you may still be able to claim the new Other Dependent Credit of $500.

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 childcare 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 or self-employment income are below a certain income level. The amount of credit you receive is based on your income, filing status, and how many qualifying kids you have.

The refundable tax credit you can receive ranges from a maximum of $6,431 if you have three or more children, to $519 if you have no children for tax year 2018, and for tax year 2019, the credit ranges from $6,557 for three or more children down to $529 with no children. Unlike other tax credits, the Earned Income Tax Credit is refundable, so if the credit is greater than the tax you owe, you can still receive the difference as a tax refund.

The gross income limits for tax year 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 gross income limits for tax year 2019 (the taxes you file in 2020): if you have three or more children, you can earn up to $50,162 ($55,952 if you are married and filing jointly) and qualify. With just two children, that drops to up to $46,703 ($52,493 married filing jointly). If you only have one child, your earnings and adjusted gross income must be less than $41,094 ($46,884 married filing jointly).

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

Don’t worry about knowing these tax rules. TurboTax asks you simple questions about you and gives 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 tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.

Comments (92) Leave your comment

  1. hi i would like to know if my boyfriend is getting money back he earned 52000.00 he is claiming our daughter ..and we pay cash for child care does that counts..

  2. my daughter that is my dependent and full student in college, earned $25 in another state but turbotax wants an extra $50 to file that second state return. Any way that I can do it under the deluxe software I bought to do her federal and state (residence)?

  3. Yes I have 2 kids and me and my boyfriend did our taxes with Jackson Hewitt and we didn’t even get back a $1000 how is that right? When last year my boyfriend got back $1500 for just him and our son Jackson Hewitt said it’s because my boyfriend didn’t have health insurance I feel like they made a mistake when we have 2 kids I really do cause my sister has 2 kids and she’s getting back alot and so is my boyfriend step brother and they both have to kids

      1. Hi Jenny,

        The penalty removal for not having health insurance does not take effect until the 2019 Tax Year filing (the Tax Returns filed in 2020)

        For Tax Year 2018 (the Tax Returns filed in 2019): The penalty for a person or family without health insurance is:
        Per adult-$695 and $347.50 per child
        Or
        Maximum of $2085 per family or 2.5% of your family income (whichever is higher)

        Thank you

  4. I have question im going go start this new job and making count, I would be making atleast 41K over the year but I’m a family of 4, 3 kids and myself. And I was wondering if When its time to file for taxes there would be an issue since im passing the 37K because i have read that for a family of 4 you should atleast make 37K? Helpp!?

  5. Hi,
    I live with my boyfriend and we have 1 child together and I have an older child (full custody). For the last couple of years, he claims our child and I claim my older child. I always thought that that was the best way to get the most credit back. If I claimed both kids this year (I made more money than my bf) would this be more beneficial? I have paid $8,760 in childcare this year. I would also qualify for medicaid if I claimed both kids. I can’t afford the “affordable healthcare” because we pay $730 a month for daycare, My boyfriend thinks we would get more back if we claim the kids separately.

  6. 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.

  7. 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???!!!

  8. 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.

  9. 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

  10. 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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