The information in this article is up to date through tax year 2020 (taxes filed in 2021).
If you are raising children and also earning a degree, there are several tax breaks available to you. You probably don’t have time to research all the deductions and credits, so here is a quick look at the top five that could save you money on your taxes and even increase your tax refund.
The Child Tax Credit
The Child Tax Credit is a benefit worth $2,000 for each qualifying dependent you claim. It is partially-refundable up to $1,400. To qualify, dependents must be younger than 17 and possess a Social Security number. If your child does not qualify for the $2,000, they may still qualify for a $500 non-refundable Credit for Other Dependents.
Student Loan Interest Deduction
If you meet the requirements for this deduction, the IRS allows you to write off up to $2,500 for interest paid on your student loans. To be eligible for the deduction, these things must be true:
- No one claims you as a dependent for taxes
- You are required to pay interest on a qualified student loan
- You paid interest on the qualified student loan
- Your filing status is not married filing separately
The deduction is an adjustment to income, so you can claim it even if you don’t itemize your deductions.
Learn more about the student loan interest deduction here.
The Lifetime Learning Credit
This tax credit is a great benefit for part-time and returning students. It is worth up to $2,000 per year that you are in classes. The exact amount you can claim will be based on how much you paid for qualified education expenses (school tuition, enrollment fees, etc.).
The Lifetime Learning Credit is different from other education credits because there is no limit to the number of years you can claim it, and there is no minimum enrollment requirement. So, even if you are only taking a few credits per semester, you may still qualify for this benefit.
Child and Dependent Care Credit
This tax credit is worth up to 20-35% of your childcare costs. The exact percentage will depend on your income. The maximum credit you could receive is $3000 for one dependent ($6,000 total per family if you have two or more dependents). To qualify, you must be earning income or seriously looking for employment, or be a full-time student.
Learn more about the Child and Dependent Care Credit here.
Earned Income Tax Credit
The EITC is a refundable tax credit for low to moderate-income taxpayers. You must have some earned income from an employer or your own business to be eligible – such as a part-time job while attending school. You can find out if you qualify for this tax credit through the EITC Assistant on the IRS website.
The amount you’ll receive in tax credit depends on your adjusted gross income and the number of children you claim as dependents. In 2020, you can receive a maximum of $6,660 if you have three or more qualifying children; $5,920 for two qualifying children; and $3,584 for one qualifying child.
As a parent and a student, you’ve got options when you file your taxes. Choose the one that is right for you. Then let TaxSlayer find all the breaks you deserve for your maximum possible refund – guaranteed.