What Can I Write Off on My Taxes for My Child?

Understanding tax benefits for children can significantly reduce a family’s tax liability. This article explains these benefits to help lower your tax obligation.

Determining a Qualifying Child or Dependent

Claiming tax benefits for children requires meeting Internal Revenue Service (IRS) criteria as a “qualifying child” or “qualifying relative.” A qualifying individual must be a U.S. citizen, U.S. national, or U.S. resident alien.

To be considered a “qualifying child,” an individual must satisfy several requirements. The relationship test dictates the child must be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them. The age test typically requires the child to be under age 17 at the end of the tax year, or under 24 if a full-time student, or any age if permanently and totally disabled.

The residency test generally requires the child to have lived with you for more than half of the tax year, with exceptions for temporary absences such as for education, illness, or military service. The support test specifies that the child cannot have provided more than half of their own financial support for the year. Additionally, a qualifying child generally cannot file a joint tax return for the year, unless it’s solely to claim a refund of withheld income tax or estimated taxes.

Alternatively, an individual may qualify as a “qualifying relative” if they do not meet the qualifying child criteria. This broader category includes individuals who may or may not be related to you. For a qualifying relative, their gross income for the year must be less than a specific amount, which is $5,050 for 2024. The support test for a qualifying relative requires you to have provided more than half of that person’s total support during the calendar year.

The relationship test for a qualifying relative is broader, including parents, grandparents, aunts, uncles, in-laws, or any individual who lived with you all year as a member of your household. A qualifying relative cannot be a qualifying child of any other taxpayer.

Major Tax Credits for Dependents

Tax credits directly reduce the amount of tax owed, offering more financial relief than deductions. These credits have specific eligibility rules and income limitations.

The Child Tax Credit (CTC) offers up to $2,000 per qualifying child for the 2024 tax year. To qualify, a child must be under age 17 and meet qualifying child rules, including having a valid Social Security number. The full CTC is available to taxpayers with modified adjusted gross income (MAGI) up to $200,000, or $400,000 for those married filing jointly. The credit is reduced by $50 for every $1,000 that MAGI exceeds these thresholds. A portion, the Additional Child Tax Credit, can be refundable up to $1,700 per qualifying child for 2024 if earned income exceeds $2,500, allowing families to receive money back even if they owe no tax.

For dependents not qualifying for the Child Tax Credit, the Credit for Other Dependents (ODC) may be available. This non-refundable credit provides up to $500 per qualifying dependent. The ODC applies to dependents of any age, including those 18 or older, who have a Social Security number or Individual Taxpayer Identification Number and meet general dependent rules but cannot be claimed for the Child Tax Credit. Similar to the CTC, the ODC phases out when income exceeds $200,000, or $400,000 for married couples filing jointly.

The Child and Dependent Care Credit (CDCC) helps with expenses for a qualifying person’s care, allowing the taxpayer (and spouse, if filing jointly) to work or look for work. Eligible expenses include payments for daycare, preschool, and nannies, provided the care is work-related. For 2024, the maximum care expenses counted are $3,000 for one qualifying person and $6,000 for two or more. The credit is a percentage of these expenses, ranging from 20% to 35%, depending on the taxpayer’s adjusted gross income (AGI). The highest percentage applies to lower incomes, with the maximum credit being $1,050 for one dependent and $2,100 for two or more.

Families incurring higher education expenses may benefit from education credits. The American Opportunity Tax Credit (AOTC) is available for eligible students for the first four years of post-secondary education. For 2024, this credit can be up to $2,500 per eligible student, calculated as 100% of the first $2,000 in qualified education expenses and 25% of the next $2,000. Qualified expenses include tuition, fees, and required course materials. Up to 40% of the AOTC, or $1,000, can be refundable, and the credit phases out for single taxpayers with MAGI between $80,000 and $90,000, and for married filing jointly with MAGI between $160,000 and $180,000.

The Lifetime Learning Credit (LLC) is another education credit, offering up to $2,000 per tax return for qualified education expenses. Unlike the AOTC, there is no limit on the number of years it can be claimed, applying to undergraduate, graduate, and vocational courses to acquire or improve job skills. The credit is 20% of the first $10,000 in qualified expenses, up to the $2,000 maximum, and qualified expenses include tuition and fees required for enrollment. The LLC is non-refundable, with income phase-out ranges the same as the AOTC. Taxpayers cannot claim both the AOTC and the LLC for the same student in the same tax year.

Other Tax Benefits Related to Children

Other tax provisions offer financial advantages to families, addressing various expenses and situations. Understanding their requirements helps maximize your tax return.

The Head of Household (HOH) filing status offers a higher standard deduction and potentially lower tax rates compared to filing as single. To qualify for this status, a taxpayer must be unmarried or considered unmarried on the last day of the tax year and have paid more than half the cost of keeping up a home for the year. The home must also be the principal residence for a qualifying person, such as a child, for more than half the year. Even if married, a taxpayer may be considered unmarried for HOH purposes if they did not live with their spouse during the last six months of the tax year and meet other criteria, such as paying more than half the household costs.

The Earned Income Tax Credit (EITC) is a refundable credit for low to moderate-income working individuals and families. While not exclusively for those with children, having a qualifying child can increase the credit amount. The EITC supplements wages, and its amount depends on income, filing status, and the number of qualifying children. EITC qualifying child rules differ slightly from Child Tax Credit rules, particularly regarding student age limits.

Medical expenses paid for a qualifying child can be included as itemized deductions. Taxpayers can deduct qualified, unreimbursed medical expenses exceeding 7.5% of their Adjusted Gross Income (AGI). For example, if a taxpayer’s AGI is $50,000, only expenses exceeding $3,750 are considered for deduction. This deduction is available only if a taxpayer itemizes deductions rather than taking the standard deduction.

The Adoption Credit is available for qualified adoption expenses paid to adopt an eligible child. For 2024, the maximum credit is $16,810 per child. Qualified expenses include adoption fees, court costs, attorney fees, and necessary travel expenses. The credit is nonrefundable, reducing tax liability to zero, and any unused credit can be carried forward for up to five years. The credit phases out for taxpayers with modified adjusted gross income above $252,150 for 2024 and is eliminated for those with MAGI over $292,150; special rules apply for adoptions of children with special needs, where the full credit may be claimed regardless of actual expenses, subject to income limits.

Essential Records and Information

Maintaining accurate records is important for claiming child-related tax benefits. The IRS requires specific documentation, and having details readily available streamlines tax preparation.

For claiming dependents and associated credits, the Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for each qualifying child or dependent is mandatory. This number is required for the Child Tax Credit, Credit for Other Dependents, and other benefits. Ensuring these numbers are accurate helps avoid processing delays.

When claiming the Child and Dependent Care Credit, detailed records of childcare expenses are necessary. This includes the name, address, and taxpayer identification number (SSN or Employer Identification Number) of the care provider, along with the total amount paid for care. Receipts or invoices from daycare centers, preschools, or individual caregivers should be kept.

For education credits like the American Opportunity Tax Credit and Lifetime Learning Credit, tuition statements, typically Form 1098-T, are crucial. This form is provided by eligible educational institutions and details qualified tuition and related expenses paid. Records of other eligible expenses, such as books and supplies, should also be retained.

For the medical expense deduction, keep all receipts and records of unreimbursed medical and dental expenses paid for yourself, your spouse, and your dependents. This includes payments for doctor visits, prescription medications, hospital stays, and health insurance premiums not paid through a pre-tax program.

For the Adoption Credit, documentation of all qualified adoption expenses is essential. This includes receipts for agency fees, court costs, legal fees, and travel expenses directly related to the adoption process.