You may be eligible for tax benefits to assist with your child's tuition and care. This can be achieved by either reducing the income taxes you pay, or by increasing your tax refund.
Three Tax Credits may be available to working parents:
Child and Dependent Care - Tax Credit
There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. The dollar limit is a yearly limit. To determine the amount of credit your work-related expenses must be multiplied by your eligible percentage.
Refer to Publication # 503 http://www.irs.gov/pub/irs-pdf/p503.pdf for detailed information.
Child Tax Credit
http://www.irs.gov/newsroom/article/0,,id=106182,00.html
With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child.
A qualifying child for this credit is someone who meets the following criteria:
- Age under 17 at the end of 2008
- Relationship Is your son, daughter, adopted child, stepchild or eligible foster child, sibling, or step-sibling or a descendant of any of these individuals
- Citizenship Is a U.S. citizen or resident alien
- Support Did not provide over half of his or her support and did live with you for more than half of 2008 (note that some exceptions to this criteria exist)
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:
- Married Filing Jointly $110,000
- Married Filing Separately $55,000
- All others $75,000
In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
Earned Income Tax Credit (EITC)
http://www.irs.gov/individuals/article/0,,id=150513,00.html
Tax Year 2009
Earned income and adjusted gross income (AGI) must each be less than:
- $43,279 (48,279) married filing jointly) with three or more qualifying children;
- $40,295 ($45,295 married filing jointly) with two qualifying children;
- $35,463 ($40,463 married filing jointly) with one qualifying child;
- $13,440 ($18,440 married filing jointly) with no qualifying children.
Tax Year 2009 maximum credit:
- $5,657 with three or more qualifying children;
- $5,028 with two qualifying children;
- $3,043 with one qualifying child;
- $457 with no qualifying children.
Investment income must be $3,100 or less for the year.
The maximum of Advance EITC workers can receive from their employers is $1,826.
The above information is provided as initial reference only and should never be acted upon without seeking professional advice from your tax advisor, the IRS, and the State Revenue offices to confirm your eligibility to receive tax benefits and refunds.
For Parents
