Parents Earning Under $150K: These 5 Tax Breaks Are Easy To Miss
Like many American parents, your combined income is under $150K, and you’d love to be in a stronger position. To paraphrase the old song, tax time is on your side when it comes to achieving this goal. Certain tax breaks may be easy to miss, but they can be essential to boosting your family’s financial future.
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To learn more about these hidden gem tax breaks, MoneyLion spoke with Kyle Paxton, CPA, real estate tax director at James Moore & Co.
“For parents earning under $150,000, the biggest tax mistake I see isn’t overpaying — it’s simply leaving money on the table,” he said. “There are several valuable tax breaks available, but many families either don’t know about them or don’t fully understand how to qualify.”
Here are five tax breaks parents often overlook, and why they matter.
1. Child Tax Credit (CTC)
Though this credit is fairly well known, Paxton says many parents assume they don’t qualify or don’t realize how much this credit can benefit them.
“Even as income approaches phase-out thresholds, partial credits may still be available,” he said. “The key is understanding how filing status and income levels affect eligibility.”
According to the IRS, the Child Tax Credit is worth up to $2,200 per qualifying child. The IRS website adds: “If you have little or no federal income tax liability, you may qualify for the Additional Child Tax Credit, up to $1,700 per qualifying child, depending on your income.”
2. Child and Dependent Care Credit
If you’re one of the many working parents and caregivers who rely on child care or elder care so you can work, look for work, or attend school, Paxton says you should see whether you’re eligible for this credit.
Here’s how it works: The Child and Dependent Care Credit is a nonrefundable tax credit for working taxpayers who pay for the care of qualifying children under age 13 or disabled dependents — including, in some cases, an older parent or a disabled spouse — who live with you for more than half the year.
Paxton adds that the credit can apply to some expenses that surprise families.
“If you’re paying for child care so you can work or look for work, this credit can offset a meaningful portion of those costs,” he said. “What often gets missed is that expenses like summer camps (not overnight) may qualify — not just traditional day care.”
3. Earned Income Tax Credit (EITC)
Paxton calls this credit “one of the most underutilized credits, especially for lower- to moderate-income families.”
The EITC is a refundable tax credit designed to help eligible workers reduce their tax bills. If the credit exceeds the amount of tax owed, the difference is paid as a refund. While you don’t need to be a parent to qualify, the credit increases significantly for families with children.
“Eligibility can be nuanced, particularly with multiple children or varying income sources,” Paxton said. “But when it applies, it can significantly increase a refund.”
4. Education-Related Tax Benefits
Paxton adds that parents don’t always take full advantage of tax credits tied to education — whether for their children or, in some cases, for themselves.
“Parents often overlook credits like the American Opportunity Credit or Lifetime Learning Credit,” he said. “Even younger families should pay attention — 529 plan contributions don’t provide a federal deduction, but state-level benefits can still create savings opportunities.”
5. Dependent Filing Strategy
With shared custody arrangements and multigenerational households becoming more common, Paxton says many families underestimate how much who claims a child as a dependent can affect their taxes.
“I’ve seen families miss out simply because they didn’t plan this in advance,” he said. “The right strategy can materially impact total tax savings across the household.”
The Bottom Line
The way Paxton sees it, family tax planning isn’t just about getting through tax season in one piece. It’s about making informed decisions year-round that support broader financial goals.
“Credits phase in and out, income thresholds matter, and small changes can have a big impact,” he said. “The families who benefit most are the ones who take a proactive approach — reviewing their situation before year-end, not after the fact.”
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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