Parents, give yourself some credit. That is, give yourself a child-related tax credit. When you file your 2013 tax return there are two child-related tax credits that can reduce you federal income tax liability.
Child tax credit. The child tax credit applies if your dependent children were age 16 or younger at the end of 2013. The basic credit is $1,000 per child, though the amount you can claim may be less when you file a joint return and your income is more than $110,000 ($75,000 for other parents).
* It is possible that you may also qualify for the "additional child tax credit," which can generate a refund even if you owe no tax, and comes into play when your tax bill is less than the basic credit.
Child and dependent care credit. Did you pay a daycare or babysitter for a child under 13 years old while you worked? You can claim a credit of as much as 35% of your expenses, up to a maximum of $1,050 for one child ($2,100 for two or more children). In addition, both you and your spouse must have earned income, unless one of you was attending school full-time.
* You can claim both of these credits on your 2013 federal income tax return in addition to the $3,900 dependency exemption for each child.
If you would like more details on how we can help you save on your tax bill contact our office at (260) 497-9761 to schedule an appointment with our tax advisors.