Can You Claim Your Kids on Your Taxes if You Were on Unemployment?
No one wants to pay more at tax time than they have to. Taking advantage of tax breaks is one way to ensure you don’t. Some of the heftiest tax breaks out there are associated with claiming your kids on your tax return. If unemployment benefits are your only source of income, you may have trouble qualifying for the tax breaks.
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Claiming Your Kids
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Your tax bill or refund is contingent on a percentage of your taxable income after factoring in your exemptions, deductions and credits. If you have children as dependents, you can claim them on your taxes and take advantage of tax breaks associated with them. The requirements for each tax break varies, but to claim your child, he usually must be a minor and live in your household the majority of the year, with you providing more than half of his financial support for the year.
Tax Breaks for Kids
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If you claim your kids on your taxes, you start with a $3,750 exemption per child. You also receive a $1,000 tax credit for each child claimed. In addition to those two main tax breaks, you can also deduct medical expenses, higher education tuition and child care payments for the children you claim on your taxes.
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Unemployment Exclusions?
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Unemployment benefits are taxable income and you must include these payments on your income tax return. Many claimants worry that the IRS won’t allow them to use certain tax breaks, such as those associated with their kids, if their only income is from unemployment. This is untrue. There is no exclusion based on the source of your income.
Concerns
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While the IRS doesn’t prevent you from taking exemptions, deductions and credits based on unemployment, the amount of income you claim can affect your eligibility. You cannot take an exemption for an amount larger than your income. Unemployment income is limited per claim. So if you claim two children on your taxes, but only made $5,000 from unemployment income that year, you are $2,500 under what you need to claim those exemptions.
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