In recent years, more and more grandparents have found themselves raising their grandchildren. If you’re one of them, you may qualify for one or more of these tax breaks.
- If you’re single and caring for a grandchild, you may be able to file your tax return as head of household, which offers lower tax rates than single status. Your grandchild must live with you for over half the year, be under age 19 at year-end (under 24 if a student), and have provided less than one-half of her own support for the year.
- You may also be able to claim your grandchild as a dependent, if you’re the one providing more than one-half of her support. This will entitle you to an additional exemption ($3,950 for 2014) and will also enable you to include her medical and dental expenses when computing your allowable medical deductions.
- If you’re working but must pay for your grandchild’s care to do so, you may qualify for a credit equal to a percentage of the expenses. Your grandchild must live with you more than half the year and be a dependent, either under age 13 or otherwise unable to care for himself.
- Working grandparents may also be able to claim the earned income credit (EIC). Their grandchild must qualify as a dependent, except he may provide more than half of his own support. More affluent grandparents won’t be eligible for this credit, since income restrictions apply.
- Child tax credits are available to most grandparents with dependent grandchildren under age 17. Although income limitations apply, they are less restrictive than those for the EIC.
- Additional tax breaks may be available to grandparents who pay to educate their dependent or otherwise qualifying grandchildren. Contact us for more details about all of these tax-saving opportunities.
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