Brought to you by: Breez DeGuzman

A growing family is a source of joy for proud parents. But it’s also a source of growing expenses. Fortunately, these expenses are offset to a certain degree by tax deductions and credits.

If you are just starting a family, you’ll find that doing your taxes is a whole new ball game compared to when you were single, and even when filing as a married couple. Your tax return could be several pages longer, and will certainly be more complicated. But the good news is that almost every change that adding a child to your family makes to your taxes is in your favor.

Here are some of the tax breaks you might receive thanks to your children:

You can claim each child as a dependent. This is deduction which automatically knocks a few thousand dollars off of your taxable income, saving you a few hundred dollars in taxes in most cases. You can even claim full-time college students as dependents until the age of 24 as long as they do not take a personal exemption on their own taxes.

Many parents qualify for the child tax credit. This credit deducts $1,000 for each child from the amount of tax you owe. It is, however, phased out for those with a high income.

Parents who pay for child care so that they may work can take the dependent care credit. The amount you can take depends on the amount spent on child care, but it tops out at just over $1,000.

Some parents can take the earned income credit. This credit is available to taxpayers with income below a certain amount, determined by filing status. You can get this credit for up to two children, and it could add a few thousand dollars to your refund.

Adoptive parents can take a tax credit of as much as $11,390 to offset adoption costs. Those who adopt special needs children are eligible to receive the entire amount of the credit, even if they spent less than that on the adoption.

Taxes, Kids and Divorce

Divorce is another thing that makes your taxes more complicated. And when there are kids involved, it tends to get even more sticky. In most cases, it’s best to seek advice from a tax professional in such situations.

One of the most important concerns when it comes to taxes after divorce is whose claim will include the children. Tax rules indicate that the parent who has custody for the greater part of the year gets the child tax exemption. But if parents had joint custody, this may not be so easy to figure out.

Another thing to consider is child support. Child support payments are non-taxable, but only if they are specifically designated in the divorce decree as such. Otherwise, the recipient can be required by law to pay taxes on it.

Children have a major effect on our taxes. It is possible to do your own taxes when there are kids involved, but having them prepared by a professional is often the best course of action. By having someone who is well-versed in tax law prepare your return, you can take full advantage of all of the tax deductions and credits available to parents.