Having a child could make you eligible for the Earned Income Tax Credit. If you have one child and your adjusted gross income was $49,084 (filing alone) or $56,004 (filing jointly with a spouse) in 2024, you can claim up to $4,213 in a refundable tax credit.
Absolutely not. And now with the latest tax changes, there is no deduction for dependents. Of course, there is still a child tax credit but it in no way justifies the cost of a child.
That said, you'll want to know about the Child Tax Credit, which could lower your tax bill up to $2,000 per qualifying child (if your income is not too high). What's more, this credit is partially refundable. So, you may receive a refund even if you don't owe any taxes, and you may even get money back as a refund.
You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.
Specifically, the Child Tax Credit was revised in the following ways for 2021: The credit amount was increased for 2021. The American Rescue Plan increased the amount of the Child Tax Credit from $2,000 to $3,600 for qualifying children under age 6, and $3,000 for other qualifying children under age 18.
The child tax credit (CTC)
The Child Tax Credit is worth a maximum of $2,000 per qualifying child. Up to $1,700 is refundable.
In most cases you can deduct child birth expenses on your tax return. Deducting childbirth expenses would be included in your itemized medical expenses and may include the following: Inpatient care at a hospital or similar institution — including meals and lodging. Drugs prescribed by a doctor.
You can get Child Tax Credit or Universal Credit for your child, depending on your circumstances and how much other income you have. You can only make a claim for Child Tax Credit if you already get Working Tax Credit. If you cannot apply for Child Tax Credit, you can apply for Universal Credit instead.
The Child Tax Credit (CTC) is the most well-known tax benefit of having a new baby. The CTC includes a $2,000 tax credit per child, only $1,700 of which is refundable. Even if your client's baby is born or adopted later in the year, they'll still qualify for the full $2,000 credit.
Your significant other earned less than $5,050 for 2024.
According to the IRS dependent rules, your boyfriend or girlfriend must have earned less than $5,050 for the 2024 tax year if you want to claim them as a dependent.
It's up to you and your spouse. You might decide that the parent who gets the biggest tax benefit should claim the child. If you can't agree, however, the dependency claim goes to your spouse because your son lived with her for more of the year than he lived with you.
If the child is yours, proving the relationship is usually as simple as providing the child's birth certificate. If it is a grandchild, sibling, niece, or nephew, you may also have to show the birth certificate of the child's parent and your birth certificate to prove the relationship.
Who are dependents? Dependents are either a qualifying child or a qualifying relative of the taxpayer. The taxpayer's spouse cannot be claimed as a dependent. Some examples of dependents include a child, stepchild, brother, sister, or parent.
Pregnancy deductions
Any year you incur significant medical expenses that relate to your pregnancy, the IRS allows you to deduct a portion of the cost on your income taxes, but only if you are eligible to itemize deductions.
Temporary Disability provides cash benefits for expectant mothers when they need to stop working before giving birth, and while recovering afterward. Family Leave provides cash benefits after the recovery period so new mothers can bond with their babies during the first year.
Statutory Maternity Pay and Maternity Allowance. Pregnant working women and those recently employed can usually get Statutory Maternity Pay ( SMP ) from their employer or Maternity Allowance ( MA ) through Jobcentre Plus.
Married filing jointly is the most common filing status for married couples. This status has the highest standard deduction and some of the most beneficial tax rate brackets. You file together and report combined income, along with your combined deductions and qualifying credits on the same return.
By placing a “0” on line 5, you are indicating that you want the most amount of tax taken out of your pay each pay period. If you wish to claim 1 for yourself instead, then less tax is taken out of your pay each pay period.
The amount of your tax refund depends on several factors including filing status, deductions and credits. Itemizing tax deductions and claiming lesser-known credits are among the ways to boost your refund. Tax deductible contributions can be made to traditional IRAs and health savings accounts up until tax day.
Child and Dependent Care Credit
If you have two or more children or dependents, you may be able to get a credit of up to 35% of $6,000 of qualifying expenses, or $2,100). The credit is nonrefundable, and so once your tax bill hits zero, you won't get any remaining amount as a refund.
You can't claim the EIC unless your investment income is $11,600 or less. If your investment income is more than $11,600, you can't claim the credit. Use Worksheet 1 in this chapter to figure your investment income.
It is important to note that even if a taxpayer has no income, they must still file a tax return if they have a dependent and wish to claim tax credits. Failure to do so could result in a loss of benefits.