Tax Credits for Dependent Children | Taxpayer Overview
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Claiming Tax Credits for Dependent Children

The IRS offers two tax credits: The Child Tax Credit and the Child and Dependent Care Credit. Knowing which tax credits a family can claim, and how to claim them, can save time and money.

A family can claim a child tax deduction for a child that is resides with the family for more than half the year. However, if they intend to claim a child that another person may also claim, consult with an accountant to determine who should claim the tax credit. Qualifying children must be under 17 at the end of the tax year to claim the credit, and cannot provide more than half of their own support for the tax year in question. The maximum amount that can be claimed for the Child Tax Credit is $1,000.00 for 2011. More information on the Child Tax Credit is available on the IRS website.

The Child and Dependent Care Credit can be used to assist families with care of children too young to be unsupervised, or disabled children who cannot care for themselves. Taxpayers must earn income from a salary, wages or self-employment to be eligible for the credit, and the credit cannot be used by those whose children are cared for by a parent or another dependent child. For the Child and Dependent Care Credit, the maximum that can be claimed is 35% of child care expenses. And while employing a nanny does make one eligible for the Child and Dependent Care Credit, doing so may involve other taxes and requirements. Find out more about the Child and Dependent Care Credit on the IRS website.

Divorced or separated parents must comply with certain conditions to claim a child tax deduction, which include how much time each parent spends with the child, support arrangements, and how much each parent makes. Information on child tax deductions for divorced or separated parents is available on the IRS publication 504.

Understanding the tax credits that a taxpayer is eligible for is key to avoiding costly and time-consuming mistakes.

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