For professional tax offices, creating a happy customer in part means helping taxpayers lower the amount of taxes owed for the year. The more you know about tax benefits, the more you can ensure important deductions or credits aren’t overlooked.
If you are preparing taxes for a parent, you can look for several credits and deductions related to children. Take some time to familiarize yourself with this list. Remember, satisfied customers are the best way to keep taxpayers returning year after year.
- Dependents: In most cases, a parent can claim their child as a dependent and deduct $4,000 for each dependent. Income levels above certain limits will reduce this amount. See Publication 501.
- Child Tax Credit: For children under the age of 17, a maximum $1,000 credit may be available. See Schedule 8812 and Publication 972.
- Child and Dependent Care Credit: If the parent paid for care for one or more qualifying persons so they could work or look for work, credit may be available for dependent children under age 14. See Publication 503.
- Earned Income Tax Credit: Parents who worked but earned less than $53,267 last year may qualify for up to $6,242. Tax professionals need to be careful following due diligence requirements to avoid errors claiming the EITC. See Publication 596.
- Adoption Credit: Certain costs paid to adopt a child may qualify for a credit. See Form 8839.
- Education Tax Credits: Individuals may qualify for the American Opportunity Tax Credit or Lifetime Learning Credit even if they don’t owe any taxes. View this IRS page for more information.
- Student Loan Interest: Interest on a qualified student loan may be deductible even if you do not itemize deductions. See Publication 970.
- Self-employed Health Insurance Deduction: If the parent was self-employed and paid for insurance, premiums paid during the year may be deductible. This may include coverage costs for children under age 27. See Publication 535.