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As the year 2023 unfolds, it’s essential for you to stay informed about the various tax credits and deductions that are available to your family. Understanding these tax benefits can help optimize your finances and reduce your overall tax liability. Today’s blog post explores some of the key tax credits and deductions that your family can take advantage of in 2023.
Child Tax Credit (CTC)
The Child Tax Credit has been expanded in recent years, and it still continues to be a valuable tax benefit for families. In 2023, eligible families can claim up to $3,000 per qualifying child below the age of 18, and $3,600 for children under the age of 6. The credit is phased out for higher-income families, but the income threshold for phase-outs has been raised, allowing more families to benefit from this credit.
Earned Income Tax Credit (EITC)Â
The Earned Income Tax Credit is a refundable credit that provides financial support to low-and moderate-income working individuals and families. In 2023, the maximum credit amount for families with three or more qualifying children is $6,728. Eligibility and credit amounts typically vary based on income, filing status as well as the number of children claimed.
Child and Dependent Care Credit
If your family incurs expenses for child care or dependent care while you work or look for work, you may qualify for the Child and Dependent Care Credit. This credit allows you to claim a percentage of your family’s eligible expenses, up to certain limits. In 2023, the maximum expenses eligible for the credit are $3,000 for one child or dependent and $6,000 for two or more children or dependents.
Adoption Tax Credit
If you have adopted or are in the process of adopting a child, your family may be eligible for the Adoption Tax Credit. This credit helps offset the costs associated with adoption, including adoption fees, court costs and travel expenses. In 2023, the maximum credit amount is $14,440 per child.
Education-Related Tax Benefits
Your family can also take advantage of various tax credits and deductions related to education expenses. The American Opportunity Credit and the Lifetime Learning Credit provide tax benefits for qualified education expenses incurred by eligible students and their families. You might also be able to deduct student loan interest payments, up to certain limits.
Medical ExpensesÂ
If your family has high medical expenses, you may be able to deduct a portion of these expenses on your tax return. In 2023, the threshold for deducting medical expenses is 7.5% ofÂ
the adjusted gross income (AGI), meaning your family can deduct expenses that exceed this threshold. Â
Dependent Exemption
While the Tax Cuts and Jobs Act suspended personal exemptions for tax years 2018 through 2025, families can still claim a dependent exemption in 2023. This exemption allows you to reduce your taxable income for each qualifying dependent.
Note: Some tax credits may be non-refundable, meaning they can only reduce your tax liability to zero, while others may be refundable, allowing you to receive a refund even if your tax liability is already reduced to zero.
Corporate Capital Inc.
From the expanded Child Tax Credit to the Earned Income Tax Credit and various education-related benefits, your family has opportunities to optimize your tax situation and improve your financial well-being. Our Corporate Capital team can help your business with bookkeeping and accounting services in Las Vegas, NV, payroll solutions, personal and corporate tax preparation services and more! If you are seeking help with your taxes, our experienced team of licensed professionals and legal experts is ready to help you. Please call 855-371-0070.