Hey there, this story refers to the 2011 tax year. For the most up-to-date information covering the 2012 tax year, check out How to Do Your Taxes if You’re a Parent.
Taxes are inherently complicated. But when you throw a dependent (in your case, a kid) into the mix, things get even more complicated.
The good news is that the government recognizes that children are a big responsibility, and gives all sorts of goodies to parents who are taking care of little (or even big) ones.
We'll walk you through everything you need to know and how to get all the credits and deductions you deserve:
Use This Form
Because you are claiming dependents, you can't use the simplest version of the 1040 form, the 1040-EZ. You'll be using either the 1040A or the original 1040 form. If you're currently helping to pay for your child's college education, you might also want the forms needed to claim education credits and deductions. Find out here which forms you'll want.
Take This Filing Status
If your child lived with you for more than half of the year and you paid for more than half of his or her living expenses, then you won't be filing as single. You'll be filing as either married filing jointly, married filing separately, head of household or widow(er). Find out which filing status is for you with our flow chart.
Take This Exemption
If you have any children under 19 (including stepchildren and legally adopted children) living with you, you most likely can take an exemption for each of them. If your child was permanently and totally disabled at any time in the year, she can always be claimed as your dependent, regardless of age.
The IRS wants to know that your kids are actually dependent on you. So you cannot claim your child as a dependent if:
- You yourself are being claimed as a dependent by someone
- Your child is married and filing a joint tax return (unless he/she is filing just to claim a refund of withheld taxes and isn't taking a personal exemption)
- Your child is not a resident of the U.S., Mexico or Canada
- Your child is over 19 and not a full-time student
- Your child is over 24
- Your child provided more than half of her own support
- Your child didn't live with you for half the year (except in cases of illness, education, business, vacation or military services, or the child was born or died during the year)
- You are separated or divorced, and your child spends more time at your ex-spouse's home. Learn more about this at the IRS website
Find out what other exemptions you can take here.
Take These Credits
If You Have a Child or Children Under Age 17 ...
You could claim the Child Tax Credit, which can reduce your taxes by up to $1,000 per child. If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit, which will refund you the difference even if you don't pay any taxes.
In order to claim the Child Tax Credit, you must answer yes to all of these questions:
- Was he/she 16 years old or younger as of December 31, 2011?
- Is he/she your son, daughter, foster child, stepchild, brother, sister, stepbrother, stepsister or child of any of those people (like your grandchild, niece or nephew)? An adopted child is considered your child.
- Did you provide more than half of his/her support?
- Did you claim him/her as a dependent on your tax return?
- Is he/she a U.S. citizen, U.S. national, or U.S. resident alien?
- Did he/she live with you for more than half of 2011? There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.
- Was your AGI less than $75,000 if you're an individual, less than $55,000 if you're married filing separately or less than $110,000 if you're married filing jointly? (If this is the only ‘no’ from the questions above, consult a tax advisor. You may still qualify for a portion of the credit! The credit is reduced by $50 for each $1,000 that the taxpayer’s AGI exceeds these thresholds.)
If the answer to all of these questions is yes, then you can take the Child Tax Credit.
If You Have a Low Income ...
You could claim the Earned Income Credit, and how large of a credit you might get is affected by the number of children you have. This credit, worth between $464 and $5,751, applies to people whose earned income and Adjusted Gross Income (which we show you how to find here) fall below a certain threshold. Unlike most credits, the EIC is refundable. That means when the EIC you qualify for exceeds the amount of taxes you owe, you get a refund. Look at the chart below to see which category applies to you. If your income is less than the number listed, you may qualify.
|Single||Married Filing Jointly|
If you plan to claim this credit, you will need all the information listed here, such as last year’s federal and state income tax statements, all your income statements for the current filing year and information on caretakers of any dependent children.
If Your Child Is a Student or Taking Classes ...
You could claim either the American Opportunity Credit or the Lifetime Learning Credit.
Education credits are claimed on the IRS form 8863. It's important to note that you cannot claim the Lifetime Learning Credit and the American Opportunity Credit for the same student, even if he/she qualifies for both. You can mix and match your credits if you are paying for more than one student, choosing one credit for one, another credit for the other, and then switch the next year. But no double crediting in the same year!
We suggest taking the American Opportunity credit if you are eligible for both, because you can claim more expenses and the credit can go up to $500 higher. Read more about how to get these credits.
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If You Had a Caretaker for Your Child ...
You could claim the Child and Dependent Care Credit. You can claim this credit if you paid someone to care for your child under 13, your spouse or a dependent who was physically or mentally incapable of caring for themselves. You'll have to provide the taxpayer ID of the care provider. You can take the credit if:
- You're filing jointly with your spouse
- You (and your spouse, if you're married) were either looking for work, earning an income or a full-time student for five or more months of the year
- The dependent for which you paid for care lived with you for more than half of the year
You cannot take the credit if:
- The care provider was someone you or your spouse can claim as a dependent
- The payment for the care was made to your spouse or the parent of the child
Find out what other credits you could take here.