Tax credits for families

There's a whole list of tax credits available for families with children and dependents. Miguel Burgos, CPA and TurboTax expert, lays out several to consider. Watch the video above or read the transcript below.

Video transcript:

Tracy Byrnes: Well, if you have a family, and you have a bunch of kids, they could be big pains in the necks, but you get some credit back for them come tax time. Thankfully, Uncle Sam understands. CPA and TurboTax expert Miguel Burgos is here with us right now to talk about this. OK, so I got kids. We have families. What are some credits that families should take advantage of?

Miguel Burgos: Well, Tracy, in the tax code, we have many credits that we can say are family-oriented. For example, we have the child tax credit that can go up to $2,000. And for 2024, up to $1,700 of those are refundable.

Also, we have the Child and Dependent Care Credit. If you have a single dependent, and you're paying for child care while you work or study, you can get a credit of up to $1,050. And if you have two or more dependents, you can get a credit of up to $2,100. Additional to that, we have the earned income credit for 2024. The maximum amount is $7,830.

And also the education credits. If one of your children is attending university or college, you can claim the American opportunity credit, which goes up to $2,500, and also the lifetime learning credit. So many things, remember, you can go to TurboTax.com to see what's the best option and which of these credit you qualify for, and get a benefit out of them.

Tracy Byrnes: Yeah, it's good stuff. I mean, there are AGI limitations on some of these credits, but please, please, please try to see if you qualify. And, of course, make sure you have your kids' social security numbers available for all of this. So one of the things, Miguel, that I think families in particular struggle with sometimes is married filing joint versus married filing separately. Is there ever a good time to do married filing separately? I feel like it's generally more beneficial to file jointly.

Miguel Burgos: And I agree with you on that, Tracy, in general, most cases. If it's just about the tax outcome, getting a rate of refund, married filing jointly is the best option. And multiple reasons for that. Tax brackets are wider, so that means that more income is taxed at a lower rate. Additional to that, there are multiple credits that are not available if you file separately. For example, the earned income credit, the child independent child and dependent care credit — and also, you may be affected by other limitations.

You may have to see how you're going to figure out the standard deduction if one of them wants to itemize, the other one wants to claim the standard deduction. However, if you have legal reasons — let's say, for example, that a couple that has some sort of prenup arrangement, or, perhaps either taxpayer or spouse owes money that the IRS will collect through their refund. Then in order to protect the refund of the other part of the tax return, either the taxpayer's or the spouse, you may want to file separately just to protect your refund and avoid the responsibility of whatever the other party may owe.

But remember, for the most part, filing jointly provides the better tax outcome. If you want to figure it out, go to turbotax.com. And we have experts that can help you to determine which one is most beneficial for you, either filing jointly or filing separately.

Tracy Byrnes: Yeah, in certain instances, it's worth running it both ways. So absolutely take advantage of the products out there. CPA and TurboTax expert Miguel Burgos, thank you for sharing all this information with us.

Miguel Burgos: Well, it's my pleasure.

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Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2024 tax year.