Close

Tax News

Back to Article List

Dependents or Qualifying Relatives Deductions and Credits

Share this article...
Dependents or Qualifying Relatives Deductions and Credits

8 Deductions and Credits You Should Be Aware Of, If You Have Dependents Or Qualifying Relatives

First let’s discuss what constitutes a dependency exemption.   A dependency exemption is available for either a qualifying child or qualifying relative.  A qualifying child must meet the relationship, abode, age and support tests.  A qualifying relative must meet the relationship, gross income, and support tests.

A qualifying child applies to the following tax provisions;

Head of household filing status
Earned income tax credit
Child tax credit
Dependent care credit

Below are eight tax credits and deductions that can help lower your tax burden.

  1. Dependency exemption: This applies to both a qualifying child and a qualifying relative.  A qualifying child can be claimed as a dependent in the year they were born. It also applies to a child that was born and died in the same year.  If a qualifying relative meets the test they would also provide a dependency exemption.
  2. Child Tax Credit: You may be able to take this credit on your tax return for each of your qualifying children under age 17. If your tax liability is such that you do not need the full amount of the Child Tax Credit, you may be able to use the Additional Child Tax Credit. The Additional Child Tax Credit is a refundable credit, meaning it may provide you a refund even if your tax liability has been reduced to zero.
  3. Child and Dependent Care Credit: You may be able to claim dependent care credit if you incur expenses to care for your qualifying child, under age 13, while you work or look for work.
  4. Earned Income Tax Credit: The EITC may benefit certain individuals who fall within a specific income range and have earned income from wages, net self-employment income, or net farming income. Those individuals with a qualifying child will receive a higher credit than those with.  It is also possible for individuals without children to qualify, although the allowed income is much lower.  The EITC can reduce your tax liability or provide a refund.
  5. Adoption Credit: Individuals who incur expenses such as adoption fees, attorney fees, court costs, social service review costs and transportation costs to adopt a child that is under age 18 or is physically or mentally of incapable of taking care of themselves, may be edible for this credit
  6. Coverdell Education Savings Account: This savings account is used to pay qualified expenses at an eligible educational institution. Contributions are not deductible; however, qualified distributions generally are tax-free.
  7. Higher Education Credits: Education tax credits can help offset the costs of education, to include tuition, books and supplies. The American Opportunity and the Lifetime Learning Credit are credits; therefore they can reduce your federal tax liability on a dollar for dollar basis.  A deduction will reduce your taxable income; therefore credits are much more valuable.
  8. Student Loan Interest: You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.

IRS Audit | Business Loss Vs. Hobby Loss Rules

IRS Offer In Compromise Program Eligibility

PDF
Printable PDF

Have a Question About This Topic?

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the Terms of Use and Privacy Policy.

NEVER MISS A STORY.

Sign up for our newsletters and get our articles delivered right to your inbox.

 

Track Your Refund

 
Track Federal Refund Check Federal Amended Return Refund

Check your State Refund

Client Login

 

Refer a Friend

.