Family Tax Credits

Credits Vs Deduction

Credits affect the amount you owe directly by reducing it or increasing your refund. Some credits will provide a refund even if you do not owe taxes. Deductions lower your taxable income; therefore, reducing taxes owed. 

Here are Family and Dependent Credits:

Child Tax Credit (CTC)

Eligibility

• Qualifying child must be under the age of 17.
• Qualifying child must be claimed as your dependent on your tax return.
• You must provide for half or more of their financial support.
• Qualifying child must not file a joint return with spouse for the tax year.

Credit Amount

• $2,000 for each qualifying child.

Phase Out

• Phase out of credit occurs when modified adjusted gross income (MAGI) exceeds $200,000 for individual ($400,00 for joint).
• Additional Child Tax Credit has increased to $1,600.

Child and Dependent Care Credit (CDCC)

Eligibility

• You paid for the care of a qualifying individual so you or your spouse (if filing jointly) can work or seek employment.

Credit Amount

• The amount of expenses to calculate the credit cannot exceed $3,000 for one qualifying individual or $6,000 for two or more. 
• If you receive a deduction for dependent care, you must reduce that amount from your calculation.

Qualifying individual

• The qualifying child was under 13 years old and your dependent.
• Your spouse who was physically or mentally unable to care for themselves and live with you for more than six months.
• An individual who was physically or mentally unable to care for themselves and live with you for more than six months and either:
  • was your dependent or 
  • qualifies as your dependent except their gross income was $4,700 or more or filed a joint return, or you (or your spouse, if filing jointly) could have been claimed as a dependent on another taxpayer’s 2023 return.
• Caution: children of divorced or separated parents or of parents living apart have different circumstances which may apply. See publication 503 for help.

Use the IRS interactive tax tool to see if you qualify

Earned Income Tax Credit (EITC)

Eligibility:

• You worked and your earned income was under $63,398.
• You have investment income less than $11,000 for 2023.
• You have a valid Social Security number by the due date of 2023 return (including extensions).
• You are a U.S. citizen or a resident alien all year.
• You did not file Form 2555, Foreign Earned Income.
• You meet certain rules if you are separated from your spouse and not filing a joint tax return.

Credit Amount: 

• No qualifying children $600
• 1 qualifying child $3,995
• 2 qualifying children $6,604
• 3 or more qualifying children $7,430

Use the IRS interactive tax tool to see if you qualify 

Adoption Credit

Eligibility

• You adopted an eligible child.

Credit Amount

• There is a credit and exclusion amount both based on MAGI. If you meet the requirements both the credit and exclusion will be $15,950 each. The exclusion must be taken first and then the credit.
• Credits taken in a previous year will have to be deducted in the current year regardless of success of adoption.
  •  Ex: 2022 credit taken $5,000. Credit available for 2023 will be $10,950.
• Any reimbursable expenses from your employer can be excluded from gross income and you are still eligible for the credit.
  • Ex: You pay $20,950 for an adoption. Your company reimburses you for $5,000. You can exclude $5,000 from gross income and claim $15,950.
• The dollar limitation applies separately to both credit and exclusion.
  • Ex: You pay $34,000 for an adoption. Your company reimburses you for $15,950. You can exclude $15,950 from gross income and claim the credit of $15,950. The remaining $2,100 cannot be used for either an exclusion or credit.
• The credit is nonrefundable which means it is capped at your tax liability.
• If you have an excess of tax liability, it can be carried forward up to 5 years.

Qualifying Expenses

• Adoption fees necessary to adopt the child
• Fees related to court and attorneys
• Travel expenses including hotel and meals
• Other expenses related to the legal adoption of an eligible child  

Phase Out

• Phase out of credit occurs when MAGI is between $239,230 and $279,230. You are not eligible for the credit if MAGI is over $279,230.

Use the IRS interactive tax tool to see if you qualify

Need Help Filing Your Return

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Check Your Refund

To check the status of your refund, you can go here.

Mindful Reminder

If you have decided to do your tax return, learning tax laws can be challenging and it takes time. Be patient and give yourself plenty of time to review. Refer to the previous year’s return as a guide. Use a method to center yourself if you become agitated. Then, come back when you are calm again. Being relaxed will help you absorb information a lot easier.

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