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Families with Children

For families with children, parents can claim certain credits and deductions to reduce their tax liabilities. If you have a qualified child, you should take advantage of following child tax benefits.

Child Tax Credit

The maximum amount that you can claim is $1,000 per qualifying child. However, you must reduce the credit amount for each qualifying child by $50 of each $1,000 modified adjusted gross income (AGI), if your AGI is above:

  • Married Filing Jointly: $110,000 (no child tax credit if MAGI exceeds $130,000)

  • Single, Head of Household (HOH), or Qualifying Widow (QW): $75,000 (no child tax credit if MAGI exceeds $95,000)

  • Married Filing Separately (MFS): $55,000 (no child tax credit if MAGI exceeds 75,000)

Under this provision, a qualifying child must be under age 17, be claimed as a dependent on your return and be provided by more than half of support from you.

Additional Child Tax Credit

A taxpayer may claim additional child tax credit, which is refundable, if any portion of the regular child tax credit is disallowed because the credit reduces the tax to zero before used up. Yet, the phased-out amount due to AGI cannot apply to this tax benefit.

Child and Dependent Care Credit

To claim for the child and dependent care credit, you must pay qualified child and dependent care expenses in order for you to go to work. The credit amount is determined by multiplying the work-related expense by a percentage provided by IRS (20-35%). The work-related expense is the lesser of $3,000 (or $6,000 for 2 or more qualifying persons), the actual expenses incurred during the year, or the taxpayer’s (or the spouse’s) earned income.

Instead, you may claim up to $5,000 deduction from your employer provided dependent care benefits such as DCFSA, which is excluded from gross income. The amount is limited to the total benefit received, the qualified expenses incurred, or your (or your spouse) earned income during the year.

Adoption Credit

A taxpayer can claim up to $13,570 adoption credit per child for qualified adoption expenses for 2017. The credit starts to be phased out, if your AGI is between $203,540 and $243,540 for 2017. A taxpayer who files MFS may need to meet certain requirements to qualify for this credit. Moreover, you can claim an exclusion for adoption expenses, if you receive adoption assistance from the employer.

Education Deductions and Credits

If you pay for the education of a qualifying individual, you may also claim certain educational deductions and credits. Please refer to the article "Education Tax Benefits" for more details.

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