Getting A Tax Credit For Your Kids

Getting A Tax Credit For Your Kids



Getting a​ Tax Credit for Your Kids
As you​ know,​ raising a​ family is​ a​ full time job and can put stress on​ your finances .​
Fortunately,​ you​ can claim a​ tax credit to​ help cut your IRS bill if​ you​ have kids.
Getting a​ Tax Credit for Your Kids
With a​ tax deduction,​ you​ are reducing the​ total amount of​ adjusted gross income you​ have .​
For instance,​ if​ you​ earned $50,​000 dollars in​ 2018 and take a​ $1,​000 deduction for something,​ you’ll have to​ pay tax on​ $49,​000 dollars in​ earnings .​
Put another way,​ the​ $1,​000 tax deduction will save you​ a​ hundred dollars or​ so in​ the​ amount you​ have to​ send to​ the​ IRS.
A tax credit is​ a​ beautiful thing .​
It is​ designed to​ reduce the​ amount of​ taxes you​ on​ a​ dollar for dollar basis .​
Taking our example above,​ you​ would not deduct a​ $1,​000 tax credit from the​ $50,​000 you​ earned .​
Instead,​ you​ would go to​ the​ tax tables and determine the​ amount of​ tax you​ owe on​ the​ $50,​000 .​
Let’s say the​ tax tables reveal you​ owe $9,​000 .​
You would reduce this amount by the​ $1,​000 tax credit and pay $8,​000 dollars to​ Uncle Same .​
Put another way,​ tax credits are tax deductions on​ steroids!
If you​ are raising children,​ you​ may be able to​ claim a​ tax credit for each one .​
They must be under 17 at​ the​ end of​ the​ tax year,​ a​ U.S .​
citizen,​ your child and a​ dependent .​
Adopted children fit within the​ tax credit as​ do stepchildren and certain foster children .​
This tax credit,​ however,​ does have some limitation .​
The primary issue is​ something called the​ phase out .​
If you​ make more than a​ particular dollar figure,​ the​ tax credit is​ either reduced or​ eliminated depending upon your particular circumstances .​
The phase out start when your adjusted gross income exceeds the​ following amounts:
1 .​
Married filing Jointly: $110,​000
2 .​
Married filing Separately: $55,​000
3 .​
All Other Designations: $75,​000
It is​ important to​ keep in​ mind that this tax credit is​ not a​ profit center .​
If you​ owe the​ IRS $4,​000,​ but can tax a​ tax credit for 5 children,​ you​ will not get $1,​000 back from the​ IRS .​
Instead,​ you​ tax bill is​ simply canceled out.




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