If you are a parent, you may be wondering how much you can expect to receive in tax credits for having a child. In this post, we will explore the details of the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), which are two of the most common tax credits for families with children. We will also provide information on how to qualify for these credits and how to claim them on your tax return.
Child Tax Credit (CTC)
The Child Tax Credit (CTC) is a tax credit that allows parents to reduce their tax liability by up to $2,000 per qualifying child. To qualify for the CTC, the child must meet certain criteria, including:
- Be under the age of 17 at the end of the tax year
- Be a US citizen, national, or resident alien
- Be claimed as a dependent on your tax return
- Have a valid Social Security number
How Much Do You Get Back in Taxes for One Child?
The amount of the CTC you can receive for one child is up to $2,000. However, the amount of the credit may be reduced based on your income. The credit begins to phase out for individuals with a modified adjusted gross income (MAGI) above $200,000 and for married couples filing jointly with a MAGI above $400,000.
How to Claim the CTC
You must use Form 1040 to file your tax return and include the child’s information to claim the CTC. Because the credit is not returnable, you can only use it to lower your tax obligation. However, up to $1,400 of the credit can be refundable for eligible taxpayers. This means that if the credit exceeds your tax liability, you may be able to receive a refund of up to $1,400 per qualifying child.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is another tax credit that is available to low- to moderate-income families with children. The credit is based on your earned income and the number of qualifying children you have. To qualify for the EITC, you must meet certain criteria, including:
- Have earned income from employment or self-employment
- Have a valid Social Security number
- Be a US citizen, national, or resident alien
How Much Do You Get Back in Taxes for One Child with the EITC?
The amount of the EITC you can receive for one child varies based on your income and the number of qualifying children you have. The maximum credit for one qualifying child in 2021 is $3,618 for taxpayers who are single, head of household, or widowed and have an income of less than $19,820. For married taxpayers filing jointly, the maximum credit for one qualifying child is $3,618 for those with an income of less than $25,470.
How to Claim the EITC
To claim the EITC, you must file a tax return and include Schedule EIC. You must also meet certain income requirements, which vary depending on your filing status and the number of qualifying children you have. The credit is refundable, which means that if the credit exceeds your tax liability, you may be able to receive a refund of the remaining amount.
Other Tax Credits for Parents
In addition to the CTC and EITC, there are several other tax credits that parents may be eligible for, including:
- Dependent Care Credit: This credit allows parents to claim a credit for a portion of the expenses they pay for child care while they work or look for work. The credit is worth up to 35% of qualifying expenses, up to a maximum of $3,000 for one child or $6,000 for two or more children.
- Adoption Credit: This credit allows parents who have adopted a child to claim credit for certain expenses related to the adoption, such as legal fees and court costs. The maximum credit for 2021 is $14,440 per child.
- American Opportunity Tax Credit: This credit allows parents to claim a credit for certain expenses related to their child’s education, such as tuition, fees, and course materials. The credit is worth up to $2,500 per eligible student per year.
- Lifetime Learning Credit: This credit allows parents to claim credit for certain expenses related to their own education or the education of their child. The credit is worth up to $2,000 per tax return per year.
Qualifying for Tax Credits
You must fulfill specific requirements, which change depending on the credit, to be eligible for tax credits. Generally speaking, you must be 18 years of age or older and have a valid Social Security number. Additionally, some credits have particular specifications regarding residency, age, and other factors.
Claiming Tax Credits
To claim tax credits, you must include the relevant information on your tax return. Some credits require additional forms or documentation, so it is important to review the instructions carefully. If you are unsure about how to claim a particular credit, you may want to consult a tax professional.
The amount you can receive back on your taxes for one child depends on the specific tax credits you are eligible for. The Child Tax Credit and Earned Income Tax Credit are two of the most common credits for families with children, but there are also other credits that may apply depending on your situation. To claim these credits, you must meet certain criteria and include the relevant information on your tax return. If you have questions about your eligibility or how to claim a particular credit, it is important to consult a tax professional.