While there was a time I dreaded tax time, having children changed all that. Rather than having to pay the IRS, these days I often get money back. I suppose the fact that having children is an expensive lifetime investment kind of offsets the tax time perks, but all the same it makes January far more pleasant each year. Unfortunately, tax credits and cuts for parents are always changing. It can be hard to stay on top of what you can and can’t claim. The IRS website is a wonderful resource for everyone, not just parents when it comes to filing taxes, but it can be a bit time consuming to navigate. Time, of course, is something many of us parents are short on, so for your convenience here’s an overview of the most common tax credits and cuts available to parents in 2011.
Exemptions for dependents:
For each child you can claim as a dependent you will get a $3,700 exemption. A child can only be claimed as a dependent once, so if you’re unmarried but with your partner, it can pay to check whether you’ll save more money putting your child on your partner’s taxes or yours.
Child tax credits:
Sadly, this one may be scaled down after the 2011 tax year. Currently, for every qualifying child you claim you will receive up to a $1,000 credit. This credit can offset taxes due, or if even be paid to you in a return. To claim this credit you must make between $3,000 and $75,000, unless you are married, and then the upper limit rises to $110,000.
Child care tax credit:
20-35% of daycare and child care expenses up to $3,000 per child can be deducted or even credited using this option. Your child must be under the age of 13, or be disabled to qualify.
Earned income credit:
If you have qualifying children and are on the lower side of the income scale, you can also qualify for the earned income credit. This credit increases with family size, but may decrease with income.
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