Tax breaks with children?

Question

I'm a new parent and was wondering what are these tax breaks and exemptions that everyone keeps talking about once you have kids and are able to claim them as dependents? Are the tax breaks/exemptions better if you file jointly with your spouse rather than filing separately?

Answer 1

For each child, you'll get an exemption that's $3300 this year - that reduces your taxable income by that much, so depending on your bracket you'd most likely save a percentage of that.

You'll get a $1000 child credit for each child - that comes directly off the taxes you owe, so is money in your pocket.

If you work outside the home and have any child care expenses, you might be able to get a credit for part of those.

If your income is less than $34,000. you might be eligible for the Earned Income Credit - having a child makes you eligible at a much higher income than if you don't have any children.

Filing joint is almost always better than filing separately. The above info assumes you're filing joint.

Congratulations on your new family addition, and good luck.

Answer 2

You get to claim an exemption for each child. Also, if the child is under the age of 17, you get a $1,000 tax credit for each child (subject to phase out for high income levels). If both spouses are working and you are paying child care expenses for daycare, etc. you can also claim a tax credit for the child care expenses you paid (up to a limit). The exemptions and credits are no better nor worse when filing married joint or married separate. You only get to claim the credit and exemption once.

Answer 3

There is an extra exemption, Child tax credit (within income limits), and if both parents work, or 1 works and 1 is a student or if one is disabled there is a credit for what you pay to a caregiver. There is a maximum per child. Your child could also make you eligible for Earned income credit if your income is within the limits.

By filing Married filing separately, there are some credits that you are not eligible to claim. Earned income credit is one of them. Joint returns are usually more advantageous for the filer.

Answer 4

When you have a child, you can claim him/her as a dependent as long as you (or you and your spouse together) are prviding at least 51% or the child's total support. In most cases you are better off filing jointly. There are exceptions though...like if one of you has defaulted on a student loan and the federal government is taking any tax refunds to repay the loan. depending on your income you may be eligible to things like Earned Income Credit, Child Tax Credit, Additional Child tax credit, deductions for chidl care expenses etc.

Answer 5

Always file married filing jointly.

Here are the breaks (click link)

http://www.newyorklife.com/cda/0,3254,11765,00.html