The average cost of raising a child to 18 years old is more than $230,000. And that’s a ballpark figure. It doesn’t, for example, include college. If you’re a parent, you should be doing everything you can to save money when possible. That means taking advantage of child-related tax credits. Here are some you should know about.
Child Tax Credit
If you can claim your child as a dependent, you likely qualify for the child tax credit. A tax credit is better than a deduction because it reduces your taxes dollar for dollar (deductions reduce the income on which your taxes are based). Many families already received half the credit in advance from July to December. If you did, you can claim the rest when you file your 2021 tax return.
Child and Dependent Care Credit
If your adjusted gross income is under $438,000 and you spend a lot on child care, you could be eligible for this tax credit. As US News US News reports, you can receive up to $4,000 for one child and $8,000 for two or more.
Adoption Tax Credit
If you adopted your child, you can claim a federal adoption tax credit of up to $14,440 per child. That’s a huge help, as adoption can be quite expensive. This credit can help offset the legal fees, travel costs and more.
The American Opportunity Tax Credit
This credit is one of the few available to older children. If your adjusted gross income is $80,000 or less (or $160,000 or less jointly) and you have a kid in college, you could qualify. This credit covers some tuition and education-related expenses; a total credit of $2,500 per year.