Back To School: Child Tax Credits & Refunds To Claim

Back To School: Child Tax Credits & Refunds To Claim

The time of the year has come for kids to get back to school! As they dive into the books and gain knowledge, you can too. When it comes to having children, there are specific tax credits to consider which can significantly assist your clients in the long term. There are two types of credits that can help leave money on their table or come back to them when you file their taxes each year.

Child Tax Credit

The child tax credit was formed to help aid families with qualifying children with a tax break. To receive the benefit of this credit, taxpayers must meet all eligibility requirements including their dependent:

  • Has a Social Security number that is valid in the United States
  • Be under the age of 18
  • Have been a U.S. citizen, U.S. national, or U.S. resident alien
  • Be a son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece, or nephew)
  • Provide no more than half of their own financial support during the year
  • Have lived with your client for more than half the year
  • Be properly claimed as their dependent on your client's return
  • Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid

The annual income must also not be more than: 

  • $150,000 if they are married and filing a joint return, or if they are filing as a qualifying widow or widower; $112,500 if they are filing as a head of household; or $75,000 if they are a single filer or are married and filing a separate return.

Earned Income Tax Credit (EITC)

An earned income tax credit aids low to moderate-income workers and families in receiving a tax break when filing their annual tax returns. To qualify they must: 

  • Have worked and earned income under $57,414
  • Have investment income below $10,000 in the tax year
  • Have a valid Social Security number by the due date of the annual return (including extensions)
  • Be a U.S. citizen or a resident alien all year
  • Not file Form 2555 (related to foreign earned income)

Other Credits that May Apply to Your Clients

The above tax credits both provide some relief and a potentially larger tax return when applied correctly to your client’s taxes. Take time in doing the research and educating yourself on the different credits applicable as it may save money that can be used for back-to-school resources! My Tax Courses Online offers a course specifically designed to cover everything you need to know for child tax and education credits to help get you started down the right path.

Here are additional tax credit options suggested by the IRS to look into: