Financial Aid for Families With Children: What to Claim
Families with children have access to specific tax credits and programs that can significantly reduce their financial burden — if they know to claim them.
The Family Assistance Landscape
Federal and state governments have created a range of financial assistance mechanisms specifically for families with children — tax credits that reduce tax liability, refundable credits that provide payments even to families with little or no tax liability, and program benefits that directly offset the costs of raising children. Together, these programs can provide thousands of dollars per year to qualifying families.
The Child Tax Credit
The Child Tax Credit provides up to $2,000 per qualifying child under 17 to eligible families. Families with income below certain thresholds can claim the Additional Child Tax Credit, which may be refundable — meaning it can reduce your tax liability below zero and generate a refund. Filing a tax return, even with low income, is necessary to claim this credit. Free tax preparation services (VITA — Volunteer Income Tax Assistance) can help income-qualifying families file and claim all credits they are entitled to.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit is one of the largest anti-poverty programs in the United States — and one of the most underutilized. The EITC is a refundable tax credit for low-to-moderate income workers, with additional benefit for families with children. The maximum credit ranges from approximately $600 (no children) to over $7,000 (three or more children) depending on income and family size. The IRS estimates that approximately 20 percent of eligible taxpayers do not claim the EITC each year.
Child and Dependent Care Tax Credit
Families who pay for childcare or dependent care so that parents can work or look for work may be eligible for the Child and Dependent Care Tax Credit. The credit is calculated as a percentage of qualifying care expenses up to $3,000 for one dependent or $6,000 for two or more. Income-qualifying families receive a higher credit percentage. Documentation of care expenses and the care provider’s tax identification number are required.
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