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“Important Tax Considerations for Parents of Children Under 17”

Tax experts advise parents of children 17 and under to consider several key points before filing their taxes. Here’s what you need to know:

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Child Tax Credit: The child  credit for 2023 has decreased compared to previous years when it was expanded due to COVID-19. While this means a potentially lower credit for parents with one or two children under 17 compared to 2021, it still stands at up to $2,000 per child. Eric Bronnenkant, director of tax at Betterment, notes that this credit can be claimed alongside the standard deduction, reducing your overall  bill.

Child and Dependent Care Credit: This credit applies to expenses paid for the care of a qualifying child, such as day care, and can also be used for dependents who are unable to care for themselves, provided certain requirements are met.

Deductible Child Care Costs: Parents can deduct up to $3,000 per child (or up to $6,000 total) for child care expenses. Additionally, if you have a dependent care program through your employer, you can deduct up to $5,000 per year in pre- dollars. However, Mark Jaeger, vice president of  operations at TAct, cautions against “double dipping,” as the total deduction cannot exceed $6,000, regardless of the source.

Potential Legislative Changes: Congress is considering expanding the child  credit, which could offer benefits depending on your income bracket and the number of children you have. Kathy Pickering, chief  officer at H&R Block, suggests that taxpayers don’t necessarily need to wait for legislation to be passed before filing their taxes, as the IRS will automatically calculate any adjustments and issue payments if the changes are enacted.

Claiming Dependents: To claim a child as a dependent, you’ll need their Social Security number. Tom O’Saben, director of  content and government relations at the National Association of  Professionals, emphasizes the importance of ensuring all children have a Social Security number for tax purposes.

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