I Have 2 Dependents…How Much Money Can I Expect On My Return?
For most of us, claiming a dependent on our annual tax return is fairly simple. Generally speaking, claiming a dependent means that we have a qualifying child that is related to you, lives with you, is under the age of 19 (or 24 if a student), and that you support financially. So, how much can you expect to see on your return for one dependent, or for two?
The deduction for dependents can help you out a lot. Quite simply, claiming one or more dependents can lower your overall tax bill. This means more money left in your pocket and less paid to the Internal Revenue Service (IRS). Each year, the IRS sets the amount that you can deduct for a dependent. For 2016, you could claim a dependent exemption deduction of $4,050 for each child and other dependent. You should be aware that this does not mean that you will receive a refund of $4,050 for each dependent; this amount actually reduces the portion of your income that is subject to federal tax. If you are in the 15% bracket this may save you $607.50 for 2016, and at 25%, you can expect to save $1,1012.50. In summary, the higher your tax bracket, the more each dependency exemption saves you.
Additional Tax Benefits for Those with Kids
There are additional tax benefits that you might qualify for if you claim two dependents:
Child Tax Credit
: The child tax credit might be even more beneficial to you (financially speaking) than the deduction for your dependents, because a tax credit actually reduces your taxes dollar for dollar. If you are married filing jointly and make under $110,000 or make under $75,000 filing on your own, you receive a tax credit of $1,000 for each child under 17 years of age.
Child and Dependent Care Credit
: The IRS is sympathetic to parents who must work and pay child care, so they offer a break to those parents who pay childcare for their kids who are younger than 13 years old. This credit is based on your childcare expenses and covers up to 35% of $3,000/year for one child or $6,000/year for two or more children. Depending on your income, the credit generally ranges from 20 – 30% of your child-care expenses and includes pre-schools, day care, private kindergarten, as well as after school programs.
Earned Income Tax Credit
: The Earned Income Tax Credit (commonly referred to as EITC or EIC) is another benefit for those who work and bring home a low to moderate income, especially those with children.
Get Help With Your Tax Return
If you have more questions about potential deductions related to qualifying dependents or your tax return in general, now is a great time to call the team at Success Tax Relief for assistance at 877-825-1179. Our team is available to help you with any part of the tax return process, including providing audit support and helping those who owe the IRS determine the best way to pay of their tax debt.