Family Taxes Take Advantage of Tax Savings (1440 x 600)

Family Taxes: Take Advantage of Tax Savings

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Tackling family taxes may seem like a puzzle, but have no worries—it’s also a new journey with new perks you may be able to take advantage of. 

Navigating the landscape of your family’s income taxes can be smoother going than you think, especially when you uncover the hidden gems in the tax code that were designed with families in mind.

From ways to claim your parents to accounting for other dependents, the tax world offers avenues to ease your financial load and put some valuable dollars back in your pocket.

Explore how the benefits of having such exemptions, deductions and credits can turn your family’s finances into a rewarding picture of savings.

Are there benefits of having a family when doing taxes?

The benefits of having dependents can translate into some very advantageous tax savings. 

One major perk is the Child Tax Credit, where parents can claim a tax credit for each qualifying child. It’s even better than a tax deduction because it reduces your taxes dollar for dollar.

Additionally, there’s the Earned Income Tax Credit (EITC), a financial boost for low-to-moderate-income families that have children. This credit is a refundable credit in that if the credit is greater than the tax you owe, you can still get the difference as a refund.

Parents can also benefit from the Credit for Child and Dependent Care, which offers relief for expenses incurred in caring for your child while working or looking for work.

Education-related tax breaks such as the American Opportunity Credit and the Lifetime Learning Credit can also ease the financial burden of higher education costs for dependents and provide a significant reduction of your family’s income taxes.

These tax benefits are like the government’s way of acknowledging the financial challenges that often accompany raising a family. Having children can enrich your life.  These child-related tax breaks can help lighten your tax load, providing tangible advantages come tax time.

Chart showing examples of credits and deductions for families.

Tax credits for families

The following family tax credits will help reduce your taxes or even help provide you with a tax refund. This tax savings

an be used toward your children’s education or even to start your family’s new financial plan!

Earned Income Tax Credit

If you have children and generate a low-to-modest income, then you may be eligible for the Earned Income Tax Credit (EITC).  The EITC is a government initiative designed to provide financial support to working families. The EITC helps ease the burden on family income taxes and ensures that families with lower earnings receive a meaningful financial lift for their families.

For the 2023 tax year, you may be able to file for the EITC if you have earned income under $63,398.In addition, your investment income must be under $11,000. You also need to have a Social Security number and you must be a US citizen or a resident alien who lived and worked in the United States for the entire year.

The more dependents you have, the higher your potential credit. For example, those with one qualifying child will get a credit of up to $3,995, while those with three or more qualifying children can get a credit of up to $7,430.

Ultimately, the EITC is one way the government recognizes and supports hardworking families, by putting a bit of extra cash in your pockets come tax time.

Child Tax Credit

You could receive up to $2,000 for each qualifying child with the Child Tax Credit.This tax credit reduces your taxes dollar for dollar.

 There are some requirements that must be met, such as the child’s age, your relationship with the child, how you financially supported the child, and his or her immigration status.

The child must be under the age of 17 and be a dependent on your tax return. They must receive more than half of their financial support from you and they must ‌have lived with you for more than half of the year. The child must also be a citizen or a resident of the U.S.. Your child needs a  Social Security number in order to claim the Child Tax Credit. The credit is gradually decreased if you have a modified adjusted gross income of more than $200,000 (or $400,000, if married and filing jointly).

Child and Dependent Care Credit

The Credit for Child and/ Dependent Care is another tax credit you can claim for the expenses associated with the care of your little ones (including nursery school, after-school programs, daycare, and even summer camp). 

If you have children under the age of 13 (there is no age limit if they are disabled) and you pay someone else to take care of them, you could qualify to receive this valuable tax break for child care

Similar to the Earned Income Tax Credit, one of the requirements to claim this credit is that you were working or were looking for work. The person who takes care of your children can’t be someone that you claim as a dependent (for example, an older child or your dependent parents) on your tax return.

Definition of a dependent according to an IRS.

Adoption Tax Credit

The adoption tax credit is another perk in the tax landscape, making the journey of expanding your family a bit more affordable. When you qualify, it helps offset the expenses incurred during the adoption process, covering things such as agency fees, legal costs, and even travel expenses.

For the 2023 tax year, the maximum amount for this credit is $15,950 per child.

To claim this credit, there are some rules regarding timing of your expenses. 

For domestic adoptions, qualifying expenses paid before the year the adoption becomes final are eligible for this credit the tax year following the year of payment. 

For foreign adoptions, expenses paid before and during the year the adoption becomes final are eligible for the credit.

Parents with their college graduate.

Education Tax Credits

You can claim an education tax credit if you or your dependent pays qualified expenses for higher education. 

The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) are two types of education credits that may help reduce your tax liability.

The AOTC offers a credit for qualified education expenses during the first four years of higher education. It’s a great way to ease the financial load of tuition, books, and other necessary education supplies.

You can receive a maximum annual credit of $2,500 with the AOTC. If this tax credit brings your tax liability to $0, you can receive up 40% of any remaining credit (up to to $1,000) refunded to you.

The LLC caters to both undergraduate and graduate students, as well as those pursuing professional degrees. While the AOTC focuses on the early college years, the LLC provides a credit for a broader range of educational pursuits and includes courses to acquire or improve your job skills.

There’s no limit on the number of years that you can claim the LCC. This credit is non-refundable, and you can receive a maximum amount of $2,000 per tax year.

Young mother and her son at the doctor.

Deductions for families

These deductions directed toward families can help provide a bit of relief this tax season. As you start preparing your paperwork and as we approach the tax deadline, don’t overlook these deductions when filing your family taxes.

Medical expense deductions

If your family’s medical expenses are more than 7.5% of your adjusted gross income, you may qualify for a deduction. These expenses may include medical bills, prescriptions, and even certain travel costs for medical care.

Medical expense deductions are provided to acknowledge the substantial burden that health-related costs can place on families. So, when tallying up family taxes, exploring medical expense deductions is a smart move!.

Student loan interest deduction

The student loan interest deduction is a beacon of relief for those navigating the world of debt incurred for higher education. This interest deduction allows eligible taxpayersto deduct up to $2,500 of the interest paid on qualified student loans from your taxable income.

Don’t overlook the opportunity to claim the student loan interest deduction this tax season. It’s a smart strategy for reducing the financial burden of student loans while offering your family a bit of tax savings.

Deductions for education savings programs

Deductions for education savings programs, such as 529 plans, are tax-friendly strategies for families aiming to save for their children’s future education expenses.

Contributions to 529 plans, designed to cover qualified educational costs, often come with state tax deductions. It’s like a double benefit – You are preparing for your child’s academic journey, and you are getting a break on your state taxes as well!

22 responses to “Family Taxes: Take Advantage of Tax Savings”

  1. Thank you for sharing this article. This is very informative, this is very helpful to all the families who wanted to have tax credits for their family.

  2. Hi, I think your blog might be having browser compatibility issues.
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  3. I am so disappointed and feel I was cheated by turbo tax. We have used the software for several years and have always been satisfied with the results. I would have said the same thing about this year except for all the add on charges. Not only did we pay the $49 for the deluxe version, but then got added on charges for another $50. Today we received a paper check in the mail, with a letter from a bank saying they deducted an additional $20 since our routing number was incorrect. We gave them the routing number our credit union gave us to use. So it cost us $120 for a simple tax return. Next year we’ll go to H&R Block and let them earn the fees.

  4. I live in one town and work in a different town. i drive 60 miles per day..can i claim mileage or anything else?

  5. I have my 3 1/2 yr old granddaughter whom has lived with me since 6 months old. Never recieved any type of support monetary nor items needed for everyday living ex. clothes food pampers etc. Now hes claimed her all 4 yrs of which the 1st one yes but now the past 2 and now this year he I know is not intitled to but still claims and keeps every penny. Now I know we are and allowed to claim her being her sole provider what do we do here being that he files right away. I know we can file back 3 yrs. but he believes he can not get auditted nor in trouble for fraud. Hes only seen her maybe even a handful of times this year. what rights do I have and what penalties will he be approached with? Thank you.

    • Hi Vickie,

      Thank you for your visit, you may be able to claim your granddaughter as a dependent since she lived with you for the entire year and you provided for more than half of her support. If the IRS challenges dependency, he may end up getting the dependency or child related tax credits disallowed; this means that he will have to pay the money back plus interest and potential penalties.

      Thank you,

      Joan Ferreira

  6. I refinanced (VA) on my main home. On my original loan I had points stretched out on a 30 year plan. Turbo Tax gave me the current deduction. But now I’m unsure on how to correctly file on my refinance. What are the basics on filing a refinanced home loan? I file my own taxes and filing correctly is very important to me. I plan to call my bank and ask them the same question. But I’d really like to hear from a tax expert.

  7. my son who is 15 and worked a summer job and grossed about 4000 in income…should i clam it on my taxes

    • Hi Lauren,

      If you provided for more than half of his living expenses you may qualify to treat him as a dependent. You may also qualify for other credits. Please use TurboTax tool to assist you in figuring out if you can claim him as a dependent.

      Thank you for your visit,

      Joan Ferreira

    • Hi Sarah,

      Thank you for your comment, please log in to your TurboTax account to verify your status. You may also choose to go to the IRS website and choose the “Where is my refund?” tool.

      Thank you


  8. I did my taxes last night and in regards to Educational Credit it stated used four years of credit already – when I had used four years. This was calculated by TurboTax. Hope can I correct since I did file last night? IRS information states can use credit for 2009, 2010, 2011, and 2012. Thanks.

  9. Our Daughter is 19 and a full time student and lives in a dorm during each semester but lives at home during the summer and most weekends and holidays.
    she does not work and is 100% financialy dependent on us.
    There are no other parents…
    since she lives out of the home more than half of the time can she be claimed as a dependent?

    • Hi Art,

      Thank you for your comment, you generally are able to claim your children to whom you provide more that 50% of their living expenses and that lived with you for more than half a year. One of the exceptions for this rule is children living in school; they will still be considered as living at home. Therefore the short answer is that you may be able to do so. TurboTax will help you walk trough all these steps to verify your eligibility to claim your daughter. Best of luck with her in school,


      Joan Ferreira

    • tracit281… You can claim the expenses associated with your truck if it is used in your business. You cannot claim expenses if it’s just for commuting to your job or for other personal uses.

      To claim vehicle expenses, report them on the forms for business income. Easiest way to find the right place is to put “car expenses” in the search bar in TurboTax. Good luck!

      Bob Meighan, VP TurboTax

  10. I LOVE Turbo Tax. Used it before and it’s Fast, Easy, Accurate and Free through IRS website if you qualify.