Important Information for Parents: A Guide to Filing Your 2023 Taxes with Children
Tax season can be a daunting time for many parents, especially with the added complexity of having children. However, with the right information and guidance, filing your 2023 taxes can be a breeze. In this guide, we will break down the key points that parents of children 17 and under need to know before filing their taxes.
Child Tax Credit: Changes and Benefits
One of the most important aspects to consider is the Child Tax Credit. For the year 2023, the credit has reverted back to its pre-COVID levels, which means that taxpayers with one or two children may see a lower credit than in previous years. However, it is still a significant credit of up to $2,000 per child. Eric Bronnenkant, director of tax at Betterment, advises that this credit can be claimed alongside the standard deduction and can help reduce your total tax bill.
Child and Dependent Care Credit: Maximizing Deductions
If you have child care expenses for a qualifying child or a dependent who is unable to care for themselves, you may be eligible for the Child and Dependent Care Credit. This credit allows you to claim expenses paid for day care, and you can also deduct up to $3,000 per child (up to a total of $6,000) in child care costs. Additionally, if your employer offers a dependent care program, you can deduct up to $5,000 in pre-tax dollars.
However, it’s important to note that you cannot “double dip” and claim both the pre-tax dollars and the child care deductions. Mark Jaeger, vice president of tax operations at TaxAct, emphasizes that if you have two children in child care and use $5,000 in pre-tax dollars, you can only claim up to $1,000 in remaining dependent care expenditures before reaching the maximum deduction of $6,000.
Pending Legislation: Potential Changes to Child Tax Credit
Congress has been considering expanding the Child Tax Credit, which could provide a boost to many taxpayers depending on their income bracket and the number of children they have. Kathy Pickering, chief tax officer at H&R Block, advises that while some taxpayers may be tempted to wait until the legislation is passed before filing their tax return, it is unnecessary. If the legislation is passed, the IRS will automatically calculate any adjustments due and send the payments accordingly.
Ensure Your Child Has a Social Security Number
It may seem obvious, but it’s crucial to ensure that your child has a Social Security number if you plan to claim them as a dependent. Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, reminds parents to include their child’s Social Security number when filing their taxes.
In conclusion, navigating the complexities of filing your taxes as a parent can be overwhelming. However, armed with the right information, you can confidently file your 2023 taxes and maximize your deductions and credits. Remember to take advantage of the Child Tax Credit, understand the rules surrounding the Child and Dependent Care Credit, stay informed about pending legislation, and ensure you have your child’s Social Security number on hand. With these tips in mind, you’ll be well-prepared to tackle tax season and secure the best possible outcome for your family’s finances.
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as professional advice. Always consult with a qualified tax professional or financial advisor for personalized guidance.
