Being a parent is an expensive business. Parents will spend an average of $233,610 to raise a child born in the year 2015, according to a 2017 report.

The U.S. tax code helps relieve parents’ financial burdens by offering several tax breaks. If you are a parent, you can potentially save on taxes by utilizing these tax credits and deductions.

Child Tax Credit

You may be able to take this credit on your tax return for each child in your household under the age of 17. Qualifying dependents must have a valid Social Security Number and the credit is refundable, which means you may a refund even if you don’t owe any tax. If you meet income requirements, the maximum credit you can claim is $2,000 per qualifying child, for the 2018 tax year.

Credit for Other Dependents

The child credit also includes a $500 non-refundable credit called the Credit for Other Dependents, sometimes referred to as the “family credit.” This allows you to claim a credit for dependents in your household that don’t meet the definition of qualifying children. These dependents may include dependent children who are age 17 or older at the end of 2018 or parents or other qualifying relatives supported by the taxpayer. This credit is nonrefundable.

Dependent Care Credit

You may be able to claim this credit if you pay someone to care for your child under age 13 while you work or look for work. To claim this credit you will need to accurately track your child care expenses. If you pay care expenses for a qualifying child or dependent so that you can work, you may be able to get a tax credit worth up to $3,000 for one qualifying person, or $6,000 for two or more.

Tax Credits for Higher Education

Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credits are education tax credits that reduce your federal income tax dollar for dollar, unlike a deduction, which reduces your taxable income.

Student Loan Interest Deduction

The deduction is claimed as an adjustment to income, so you do not need to itemize your deductions. You may be able to deduct up to $2,500 in interest payments you made during the year. Take into account that this only works if the loan is in your name. You can’t claim this deduction if you’re just helping your children out with their loans. You also can’t claim this deduction if your filing status is married filing separately or if your spouse can be claimed as a dependent on another tax return.

Raising children can impact your taxes and financial situation in many ways. Seek a tax advisor in Springfield Missouri to take full advantage of credits and deductions you’re qualified for. Call Schultz, Wood, and Rapp P.C. for the advice and counsel you need from a trusted Certified Public Accountant in Springfield Missouri.