Thursday, October 08, 2009

Potential Tax Credits Related to Children - 2009 Update

There are many tax credits that are potentially available to taxpayers with children. Here are the ones that I have identified so far. I've included the updated numbers I found for the 2009 tax year for Married Filing Joint (MFJ) status.

Credits for 2009 Tax year*
TypeMaximum BenefitMFJ Phaseout Begins atMFJ 100% Phaseout at
Child Care Credit$1,050 per child
$2,100 maximum
$15,00043% phaseout at $43,000
Adoption Credit$12,150$182,180$222,180
Child Tax Credit$1000 per child$110,000 $110,000 + $20,000 for each child
Additional Child Tax Creditup to $1000 per childn/aearned income below $3,000
Hope Education Credit$2500 per child up to four years$160,000$180,000
Lifetime Learning Credit$2000 per family$100,000$120,000
Earned Income Credit

$2853 - one child
$5028- 2 children
$5657 - 3 or more

$16,420$35,463 for one child
$40,295 for 2 children
$43,279 for 3 or more

*While the sources are believed to be good, My Wealth Builder cannot guarantee the accuracy, timeliness or completeness of the information in the table.

Since the 2007 update, the credits have either stayed the same (child dependent care, and child tax credits) or have become more generous, with either larger credits or allowing higher income levels to qualify. Currently, we are only eligible for the child tax credit. Hopefully, the education credits (Hope and Lifetime Learning) will still be available when our daughter attends college.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

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