Tax Breaks for Married Couples & Children
The Internal Revenue Service offers certain tax breaks for taxpayers who have children and to taxpayers that are married. The exact tax breaks a taxpayer qualifies for depend on your unique tax situation, since several factors may affect what tax breaks you qualify for.
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Child Tax Credit
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The IRS allots a credit of up to $1,000 for every child, depending on the situation of the taxpayer. The taxpayer’s dependent must have been 16 or younger at the end of the tax year and must be the taxpayer’s child, grandchild, niece, nephew, sibling or foster child. The taxpayer also must provide at least half of the support to the child while the child has lived with the taxpayer for more than half of the tax year. The child must be a citizen of the United States. The tax credit you receive is reduced based on your modified adjusted gross income, with taxpayers who earn over a certain amount not receiving as great of a credit per child.
Additional Child Tax Credit
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If you do not qualify for the full child tax credit because your income is too high, you may apply for the additional child tax credit from the IRS. The credit gives you a refund, including in situations where you do not owe any tax money to the IRS. You must answer “Yes” on either Line 9 or 10 on the Child Tax Credit Worksheet, and then use Form 8812 to calculate if you qualify for the additional child tax credit.
Married Filing Jointly
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Even though your combined income is an overall higher amount, you may qualify for some tax breaks by filing jointly instead of separately. When one spouse makes significantly more than the other, filing jointly actually decreases the tax exposure for the higher-earning spouse, reducing the amount of taxes that spouse owes. By filing jointly, you also can take tax deductions for child and dependent care costs, student loan interest, the American Opportunity and Lifetime Learning credits, and the earned income credit.
Married Filing Separately
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Even though filing separately does not allow you to take some of the same tax deductions you would qualify for by filing jointly, depending on your situation, you may come out ahead on taxes. When both you and your spouse earn similar incomes, and those incomes are on the higher end of the earning spectrum, filing your taxes jointly may result in a marriage penalty. Filling out your tax return forms jointly and separately will help you see which scenario saves you more on taxes.
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