Grandkids Come With Big Tax Benefits, if You’re Raising Them

There are certain tax benefits available for grandparents who are raising their grandchildren in Washington state, USA. One of the key programs that could be relevant in this situation is the “Kinship Caregiver Support Program.” However, please note that laws and regulations can change over time, so it’s important to verify this information with the latest sources or consult with a tax professional or legal expert for the most up-to-date and accurate information.

The Kinship Caregiver Support Program in Washington State provides financial assistance to eligible relatives (including grandparents) who are caring for children who are related to them by blood, marriage, or adoption. The program aims to support caregivers in providing a safe and stable home for these children.

Additionally, there might be other tax credits and benefits available at the federal level that could apply to grandparents raising their grandchildren. For example:

  1. Child Tax Credit: The Child Tax Credit is a federal tax credit that provides financial assistance to families with dependent children. This credit could potentially apply to grandparents raising grandchildren if they meet the eligibility criteria.
  2. Earned Income Tax Credit (EITC): The EITC is a refundable tax credit available to low- and moderate-income workers. Eligibility for the EITC depends on factors like income and family size, which could include grandchildren under certain circumstances.
  3. Dependent Exemption: In the past, tax laws allowed for a dependent exemption, which could potentially benefit grandparents raising grandchildren. However, tax laws regarding exemptions have changed, and it’s important to understand the current rules.
  4. Adoption Tax Credit: If legal adoption occurs, there might be an adoption tax credit available to help with the costs associated with the adoption process.

It’s crucial to consult with a tax professional or legal advisor who is well-versed in the latest tax laws and regulations in Washington State to determine the specific tax benefits that might be applicable in your situation. They can provide personalized advice based on your circumstances and the most current information available.

The basics

To claim your new charge as a dependent, the child must be 18 or younger or, if a full-time student, under age 24. If the child is permanently and completely disabled, there is no age limit. In addition, the child must live with you for more than half the year (although there are some exceptions).

If your grandchild qualifies as a dependent, it opens up more tax breaks for you. Among them: For 2017, you can take a personal exemption of $4,050 for the dependent grandchild. The exemption begins phasing out for higher incomes.

Be aware that personal exemptions will disappear from 2018 through 2025, although the standard deduction will nearly double for all taxpayers during the same time.

Additionally, if your tax filing status has been single, bringing a dependent child into the mix allows you to file as head of household. This would mean a higher standard deduction — $9,350 for 2017 — along with a potentially lower tax rate.

Child tax credit

The child tax credit, or CTC, is a tax break for families with children below the age of 17. To qualify, you have to meet certain income requirements as well.

  • If you’ve not yet filed for the 2022 tax year (taxes due in 2023), the credit could get you up to $2,000 per child, with $1,500 of the credit being potentially refundable.

  • In 2023 (taxes filed in 2024), the CTC remains at a maximum of $2,000 per child, but the partially refundable portion, known as the additional child tax credit, rises to $1,600.

For married couples filing jointly, the phaseout will start at $400,000, and for single filers and heads of household, $200,000. The eligible refundable portion also will go up.

Child and dependent care credit

This provides a tax break to reduce the cost of child care while you’re working or looking for work. As long as your tax-filing status is not married filing separately and the child is under age 13, you can claim up to 35 percent (depending on your adjusted gross income) of your child-care expenses, with caps.

For one dependent, up to $3,000 of qualifying expenses can be used for the calculation. For two or more dependents, the expense cap is $6,000. If you use pretax dollars to pay for the care, that money cannot count toward your qualifying expenses.

Leave a Comment