If You Have Kids, These Tax Credits Could Put Thousands Back in Your Pocket
Having kids can bring a lot of joy into your life. It can also bring a lot of expenses. If you’ve ever opened a daycare invoice and felt your stomach drop — or blinked in frustration at yet another fundraiser for your kid’s school — you understand the financial stress. Yet there’s one time of year when you may be able to put money back in your pocket: tax time.
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This might surprise you, but several federal tax credits designed specifically for families can significantly reduce what you owe — or even boost your refund — potentially by thousands of dollars. If you have children, it’s worth talking to your tax preparer about whether you qualify for any of the following credits when you file your return.
Child Tax Credit (CTC)
Many families are already aware of this credit — and for good reason. It’s one of the most valuable tax breaks available to parents, designed to help offset the cost of raising a child.
For tax year 2025 (returns filed in 2026), the Child Tax Credit is worth up to $2,200 per qualifying child under age 17, up from $2,000 in prior years. Part of the credit may be refundable, meaning you could receive money back even if you owe little or no federal income tax.
But simply having a child in your home doesn’t automatically make you eligible. There are specific requirements. The child must be under age 17 at the end of the tax year, be claimed as your dependent, and meet relationship, residency and support tests set by the IRS.
There’s also another important stipulation: both you (and your spouse, if filing jointly) and the child must have valid Social Security numbers issued before the tax return due date to claim the credit.
Earned Income Tax Credit (EITC)
For low- to moderate-income families, the EITC offers a substantial boost at tax time.
Writing for Kiplinger, Kate Schubel explains: “[It’s] a refundable tax credit that's available to people with earned income below a certain threshold. How much you get depends on your filing status, the number of qualifying children in your household, and your earned income.”
For tax year 2025, the EITC can be worth as much as $8,046 for families with three or more qualifying children. Even families with fewer children — or none at all — may still qualify for a smaller credit.
If you’re wondering whether your household qualifies, the IRS publishes annual income and investment income limits, along with maximum credit amounts, for each filing status and family size. Tax software or a preparer can help determine whether you’re eligible and how much the credit may be worth to you.
Child and Dependent Care Credit
One of the biggest financial hurdles for parents is the cost of caregiving. While you’re at work, you’re paying someone else to care for your children — and in multigenerational households, you may also be paying for eldercare.
It’s a heavy lift, financially and emotionally.
But the Child and Dependent Care Credit can help offset some of those costs. This is a nonrefundable credit available to people who are working, looking for work or in school and who pay for care for a qualifying person. That generally includes children under age 13 or a spouse or dependent who is unable to care for themselves. In most cases, the qualifying person must live with you for more than half the year.
The IRS is clear that you must identify the caregiver on your tax return. It also lists who doesn’t qualify as a caregiver for purposes of the credit:
Your (or your spouse’s, if filing jointly) dependent
Your child (including stepchild or foster child) under age 19 at year-end, even if not your dependent
Your spouse at any time during the year
The parent of your qualifying child if the child is under 13
If you and your spouse (if filing jointly) have earned income and paid qualified care expenses so you could work or look for work, you may be eligible to claim a percentage of up to $3,000 in expenses for one qualifying person, or up to $6,000 for two or more. Keep in mind that food, lodging, clothing, education and entertainment generally do not count as qualified expenses.
Caregivers don’t get many breaks. This is one of the few built into the tax code, and one worth asking your preparer about.
The Bottom Line
Who would have thought that tax credits could rank alongside the pitter-patter of little feet as one of the unexpected perks of having kids? Yet for many families, these credits offer an opportunity to put real money back in their pockets during tax season.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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