Life throws many challenges at you. If you are raising children while trying to earn a degree, there’s no denying your plate is full. You may not have time to research all the tax breaks that exist for someone in your circumstances. Here are 5 important credits and deductions that you can use now.
1. The Child Tax Credit – The Child Tax Credit is a benefit worth $2,000 for each qualifying dependent you claim. The credit (previously $1,000) was doubled by the Tax Cuts and Jobs Act when it was signed into law in 2017. It is now partially-refundable up to $1,400. Some of the qualifications for the credit have changed under tax reform. 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 new $500 non-refundable credit. Find out more about these credits and other tax law changes affecting families here.
2. Student Loan Interest Deduction – As long as you meet the requirements, you can deduct up to $2,500 for interest paid on your student loans. The deduction is an adjustment to income, so you can claim it even if you don’t itemize your deductions. Learn more about the deduction and eligibility requirements here.
3. 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. There is no limit to the number of years you can claim it, and there is no minimum enrollment requirement. (Read also College Students: Are You Getting Your Education Tax Credits?).
4. Child and Dependent Care Credit – You could receive a credit to cover 20-35% of your childcare costs (the percentage depends on the amount of your income.) The total allowable credit is worth up to $3000 for one dependent ($6,000 total per family if you have two or more dependents). To qualify for the credit, you must earn income for the year, be looking for work, or be a full-time student. Learn more about the credit and requirements here.
5. 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. The amount of the credit depends on your adjusted gross income and the number of children you claim as dependents. According to the IRS, more than 25 million eligible workers and families received EITC last year. The average EITC amount was roughly $2,470. You can find out if you qualify for this tax credit through the EITC Assistant on the IRS website.