Bringing home a bundle of joy doesn’t just mean sleepless nights and additional expenses.
There are actually many ways that your children or dependents can bring you bundles of savings through tax benefits you weren’t able to claim before becoming a parent.
As you get going filing your 2015 taxes, take a look at these top tax deductions and credits that may save you money.
Dependent Exemption
One big financial benefit of having little ones is that you can claim a dependent exemption. What’s wonderful about this is that it reduces your taxable income. The exemption amount for the new tax year is $4,000 per child when you file your taxes, up from $3,950 each for 2014. If your child is under 19 or is a full-time student, under age 24, you may be eligible for this tax benefit.
Even if your kids are over the age limit, you may be able to claim them if they didn’t make over $4,000 and they don’t provide over half of their own support.
Earned Income Tax Credit
Depending on your family’s income, size and filing status, you may be able to take advantage of this refundable tax credit (meaning you may be able to get some money back even if it exceeds your tax liability). Working families may find this credit can be worth up to $3,359 for one qualifying child and up to $6,242 for three or more kids.
This tax credit is a huge benefit for parents, but the IRS reports that only 1 out of 5 eligible taxpayers takes it.
Child and Dependent Care Credit
If you’re going back to work or school and will be paying for child care for your dependents (under age 13), you may use this credit to claim up to $1,050 for one qualifying child and up to $2,100 for two or more. You may even be able to take the credit if you took your child to summer day camp so you could work or go to school.
Child Tax Credit
You may also be eligible for a child tax credit, which is even better than a deduction, since it reduces your taxes dollar for dollar. It’s an additional $1,000 credit you may be able to claim for each of your children under 17.
Education Credits and Deductions
Even though your kids may no longer be in the day care phase, there’s still a reprieve. The IRS knows that a college education can be costly, so there are a few tax benefits for shelling out your cash for college that can save you money.
If your child is in the first four years of college and is attending college full time, you may be able to get the American Opportunity Tax Credit worth up to $2,500.
If your child has decided to be a professional student and returns to college after finishing a four-year degree, you may be eligible for the Lifetime Leaning Credit worth up to $2,000.
Don’t forget the interest you paid on student loans, which is one of the only times you can deduct personal interest besides mortgage. The student loan interest deduction is worth up to $2,500.
Medical Expenses
If your medical expenses are more than 10 percent (7.5 percent if you are 65 and older) of your adjusted gross income, you may be able to deduct them. Keep all receipts and don’t forget you can deduct your child’s medical expenses (all those trips to the doctor can quickly add up).
You can also deduct your mileage for your trips to the doctor at .23 cents per mile.
Adoption Credit
Adoption can be an incredibly expensive, but rewarding experience. Fortunately, the IRS offers a tax break for adopting which is quite generous and is a direct reduction of your income tax liability.
The maximum credit you can claim on your 2015 taxes is $13,400, which is for expenses directly related to the adoption of a child — such as adoption fees, legal fees and travel necessary to facilitate the adoption.
As your family grows, so do your expenses. That’s why it’s important to take advantage of the tax deductions and credits that you qualify for, using helpful resources to help navigate those deductions and credits related to your family. From medical bills to paying for child care, every parent deserves a break, taxes included.
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Top Tax Deductions and Credits If You Have Children or Dependents originally appeared on usnews.com
