Other Tax Credits for Low Income Individuals and Families

A number of federal tax credit programs are designed specifically for workers with children and dependents. The goal of these programs is to help workers maintain employment by offsetting the costs related to caring for children and dependents. This section includes general information about tax credits for families, as well as specific information about the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Adoption Tax Credit. In addition, this section explores credits available for those investing in their education and health.

General Information on Tax Credits for Families

NWLC.jpgThe 2016 Tax Credits Outreach Campaign Toolkit, a project of the National Women’s Law Center, provides resources advocates and community leaders need to make sure families find out about state and federal tax credits for which they may be eligible. Resources include:

Child Tax Credit
The Child Tax Credit (CTC) is a federal tax credit designed to help working families offset the cost of raising children. First created in 1997, the CTC was expanded through the Economic Growth and Tax Relief Reconciliation Act of 2001, and then again through ARRA in 2009, to provide greater tax relief and make a portion of the credit refundable. Those improvements were then extended through December 31, 2012 in The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. In 2015, key improvements to the CTC were permanently extended. The credit is currently worth up to $1,000 per child under age 17 and is subtracted from the amount of income taxes the family owes. If the CTC exceeds the amount of taxes owed, a portion of the difference is refundable. This section provides information about the CTC including relevant legislative activity, eligibility, and how to access the appropriate application forms.

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Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit (CDCTC) is a federal tax credit designed to help working families pay for the care of qualified individuals including children, adult dependents, or an incapacitated spouse. The goal is to offset care-related expenses in order for the taxpayer to maintain employment. The CDCTC is a percentage of the care-related expenses and varies based on the taxpayer's adjusted gross income. Currently, taxpayers can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents. The credit is up to 35% of these expenses, depending on income; the lower the income the higher the percentage of care-related expenses that can be claimed. The current CDCTC benefits are a result of an expansion in the 2001 tax cuts that were extended through December 31, 2012 as part of H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This section provides resources with general information about the CDCTC, including eligibility and how to access the appropriate forms.
Adoption Tax Credit
The Adoption Tax Credit (ATC) is a program for low-income people who have expended qualified out-of-pocket expenses related to the adoption of a child. The credit amount depends on the expenses incurred. Families who have adopted children with special needs can claim the full credit, even if the expenses are less than the credit amount. Adoptions of children with special needs from the foster care system are also fully eligible, even if no adoption expenses were incurred. The ATC was made permanent in the American Taxpayer Relief Act of 2012. This section provides basic information about the ATC and explanations of eligibility and how to apply.
Higher Education Tax Credits
The American Opportunity Tax Credit (AOTC), which expanded and renamed the already-existing Hope and Lifetime Learning credit, can be claimed for tuition and certain fees for higher education. The AOTC, which was to expire at the end of 2012, was extended through December 2017 by the American Taxpayer Relief Act of 2012. This section provides general information about the AOTC and allowable expenses.
Health Coverage Tax Credits
Under the Affordable Care Act (ACA, also sometimes known as Obamacare), millions of Americans qualify for financial assistance to help cover the cost of health insurance. There are also special rules that pertain to victims of domestic violence. Note that the resources and information provided here pertain only to people enrolling in coverage through the federal marketplace. Different rules may apply to those receiving coverage through a state marketplace plan; through Medicaid, Medicare, or CHIP; or through an employer-sponsored plan.