Filing taxes for a family can be complex. There are many variables that need to be taken into consideration. In this article, we will go over some of the variables involved when filing taxes for a family.
Filing Status
You have five filing statuses to choose from. Which one you choose will impact how much you owe or the size of the refund you receive. If also will determine if you are eligible for certain deductions and credits. The filing statuses include the following:
1. Single
You can file as single if you are not married and do not have any dependents.
2. Married Filing Jointly
With this status, you file a tax return with your spouse. It allows you to have higher income thresholds for some tax credits. However, on the downside, you are jointly liable for any taxes due on this type of return.
3. Married Filing Separately
If you file married filing separately you and your spouse each file your own tax return. The benefit of doing this is it protects you from your spouse’s tax obligations. Unfortunately, filing under this status prevents you from claiming such credits as the adoption credit, educational credits, and child and dependent care credits.
4. Head of Household
This tax filing status provides benefits for the unmarried taxpayer with dependents. To qualify you must meet three qualifications. (1) You must be unmarried, (2) you must pay more than half of the costs from maintaining the home, (3) you must be supporting a qualifying individual form more than half of the year.
5. Qualifying Widow(er) with Dependent Child
With this filing status you will get to use joint tax rates. But there is a restricted period in which to claim it. You can only claim this status if your spouse died within the last two years, and you have a dependent child. Additionally, you must have paid more than 50% of home costs for yourself and your child. Finally, you cannot be remarried.
Tax Credits
A tax credit lets you reduce your income on a dollar-for-dollar amount. Certain situations will allow you to claim these credits. For families these credits can be extremely advantageous. Some of the credits available include:
Earned Income Tax Credit
This credit can be refundable and ranges from $600 to $7,430. This credit is created for low to middle income taxpayers and comes with income limits, dependent on your filing status and number of dependents.
| Number of Dependents | Single | Married |
| 0 | $17,640 | $24,210 |
| 1 | $46,560 | $53,120 |
| 2 | $52,918 | $59,478 |
| 3+ | $56,838 | $63,698 |
Child Tax Credit
With this credit you can claim up to a $2,500 credit per child. To claim a child, they must meet certain requirements. First, the child must have a social security number. Second, they must be younger than 17 on the last day of the tax year. Third, they must have lived with you for more than half of the year. Fourth, you must have paid for more than half of the child’s needs. Lastly, you must claim them as a dependent on your tax return.
Child and Dependent Care Credit
This credit allows you to receive a credit for a percentage of what you paid a care provider to enable you to work. This credit is only eligible for the care of dependents under the age of 13 or older if they are incapable of self-care. There are care giver restrictions. For example, the provider cannot be your spouse, the child’s other parent, one of your children under 19, or any other dependent you claim on your tax return. There is a $3,000 limit to this credit.
Adoption Tax Credit
If you adopt a child under 18 or someone incapable of self-care you can take a tax credit for qualifying adoption expenses. These expenses would include adoption fees, traveling costs, attorney fees and court costs. Adoption of stepchildren does not qualify for this credit.
Preparing for Tax Season
When you are filing taxes for a family it is important you identify who will be claiming the children. If you are married filing jointly this is not an issue. However, if you are divorced, not married, or married and filing separate tax returns, you need to determine which parent will claim the dependents. You will also need to prepare all of your tax documents to have them ready to go for your tax preparer.
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