Look for all possible deductions for your 2015 taxes.

With the end of the year drawing closer, its the time to get your 2015 taxes in order. Did you know that there are a few different ways your children and dependents can be a source of tax deduction come April?

Who is dependent on you?

Every dependent that you claim for your 2015 taxes can reduce your taxable income by almost $4,000, and the IRS allows for a wider range of dependents that you may think. Qualifications for a dependent are:

• Must be a U.S. citizen or resident that isn’t being declared by anyone else
• Can’t file a joint tax return with anyone else (i.e., a spouse)
• Children must be related to you biologically, by adoption, by “step-” status, or some types of foster care
• Children of the dependents may also qualify
• Have to have lived with you for at least half of the year
• Must be under the age of 19, or 24 if they are a full-time student
• You must provide at least half of their support, but they can earn money

Does your child have a Social Security Number?

The child tax credit can reduce your taxes by up to $1,000 for each child under your care and under the age of 17 (at the end of 2015). You must be able to claim the child as a dependent, so that the above qualifications must be met. In addition to these, your child must have a federal taxpayer identity number, which is usually the child’s Social Security Number. Parents of newborns should start this process very early on so they can start seeing the tax credit. Some other things to keep in mind when claiming the child tax credit are:

• This credit is limited by income because you can see the credit disappear when the modified gross income (MAGI) reaches $110,000 for married couples filing jointly, and $75,000 for those filing as single.
• You have to fill out form 1040 and 1040A or  1040NR to receive the credit, the 1040EZ form is not enough.

Did you have any help?

Another tax-break available to parents that work outside of the home and pay for child care is the child and dependent care credit. This credit applies if the children are under the age of 12 at the end of 2015, but does not apply if the caregiver being paid is your spouse, the child’s parent, your dependent, or your child. Your funds must qualify for this credit as well, for one child the limit is $3,000 and $6,000 for multiple children. Depending on your income, the tax credit ranges from 25 to 35 percent of your qualifying amount. In addition to this:

• The expenses paid for the child care cannot exceed the lesser of the household incomes
• Any withheld pre-tax funds that are placed in a dependent daycare flexible spending account must be used against the $3,000/$6,000 limit

This means that if you qualify for the limit you can even include summer day camps and athletic camps! However, overnight costs, summer school and tutoring expenses do not apply.

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