What Money Can You Claim From the Government for Children?
When filing federal income tax returns, there are a number of credits and deductions you can claim for children. Some deductions are used as a way to reduce the amount of taxes you owe, while some credits can cause you to receive an income tax refund payment. Each child deduction or credit has specific rules and restrictions, however, be sure to read and fill out required forms fully. If you're not sure which deductions or credits you can take, talk to an IRS counselor or licensed tax professional.
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Standard Deductions
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The standard deduction, or exemption, is taken on form 1040 line number 42. For the 2010 tax year, all dependents including yourself, your spouse and your children qualify for an exemption amount of $3,650. If you have three children for example, you can claim $10,950 in addition to exemptions claimed for yourself and other dependents listed on your tax return.
Earned Income Credit
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The Earned Income Credit, EIC, is available to either individuals or families who earned income from wages, self employment or certain types of disability payments -- as long as that income did not exceed specific levels. When one or more qualifying child is listed as a dependent on the income tax return, the EIC is increased substantially. Receiving the EIC with one or more qualifying children can greatly reduce the amount of taxes you owe, or generate a tax refund payment. The maximum Earned Income Credit for the 2010 tax year is $5,666.
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Childcare Deductions
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If you pay a person or business to care for your child while you're working, you can claim a portion of the child care costs as a deduction or credit on your income tax return. You must fill out IRS form 2441 to claim child care expenses, and follow the instructions on that form for the appropriate place to enter this deduction on your tax form.
Child Tax Credit
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The child tax credit may allow you to reduce your taxes by up to $1,000 for each qualifying child. A qualifying child is a son, daughter, step-child, niece, nephew, foster child, sibling or grandchild who was under the age of 17 at the end of 2010 and lived with you at least six months of the year. They must also be listed as a dependent on your tax return. This credit is used to reduce the amount of tax you have showing on form 1040 line 46. If that amount is already zero, this credit is not needed.
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References
- Photo Credit Children to keep for hands of father and jump. focus on children image by Pavel Losevsky from Fotolia.com
