The 2023 nationwide preparation for tax season kept everyone busy ticking all the check box before filing. One of the busiest individuals would be parents who expect to see deductions or tax credits upon filing. Here are a few methods for people with children to receive extra tax credits, especially for those who just started out as parents this past year.
Child Tax Credit and Earned Income Tax Credit
The Child Tax Credit, which is worth $2,000 this year, is the most popular of these credits, but others, like the Earned Income Tax Credit, assist people with low to moderate incomes by lowering their taxes, which can even result in a refund if your taxes are below zero.
For instance, taxpayers who claim to have one child and make less than $43,492 per year will be eligible for a $3,733 tax credit.
Adoption Tax Credit
Thousands of families enjoy the joy of adopting a child and bringing them into their homes each year. There are costs involved, as there are with any expanding family. The federal government created the Adoption Tax Credit to offset some of the expenses that would make it difficult for a family to afford the option of adoption (ATC).
Adoption Tax Credits of up to $14,890 per qualified kid are available to families who participated in the adoption process during the previous year.
The expenditures that can be deducted include court charges, attorney fees, adoption fees, travel costs (such as lodging and food when traveling for adoption-related matters), and other costs directly associated with adoption.
Head of Household Tax Credit
The filing status of “head of household” is utilized by unmarried taxpayers who provide housing and assistance for an eligible individual. If a taxpayer is single and covers more than half the expense of supporting and housing an eligible individual, they may file tax returns as the head of household (HOH).
The head of household filing position is designed to provide financial support to single or divorcing people with dependents. Higher standard deductions and lower tax rates are available to taxpayers who qualify for the HOH classification as opposed to those who file as single or as a married couple filing separately.
The additional standard deduction for people 65 and over will increase to $1,500 per person from $1,400 in 2022 (a head of household is a single adult with dependents, such as children); if that senior is single, the additional deduction will increase to $1,850 in 2023 from $1,750.