Tax breaks for parents
I mentioned earlier that the personal exemption is going away, which could disproportionally affect larger families.
However, this loss and more should be made up for by the expanded Child Tax Credit, which is available for qualified children under age 17. Specifically, the bill doubles the credit from $1,000 to $2,000, and also increases the amount of the credit that is refundable to $1,400.
In addition, the phaseout threshold for the credit is dramatically increasing.
Tax Filing Status Old Phaseout Threshold New Phaseout Threshold Married Filing Jointly $110,000 $400,000 Individuals $75,000 $200,00
If your children are 17 or older or you take care of elderly relatives, you can claim a nonrefundable $500 credit, subject to the same income thresholds.
Furthermore, the Child and Dependent Care Credit, which allows parents to deduct qualified child care expenses, has been kept in place. This can be worth as much as $1,050 for one child under 13 or $2,100 for two children. Plus, up to $5,000 of income can still be sheltered in a dependent care flexible spending account on a pre-tax basis to help make child care more affordable. You can't use both of these breaks to cover the same child care costs, but with the annual cost of child care well over $20,000 per year for two children in many areas, it's safe to say that many parents can take advantage of the FSA and credit, both of which remain in place.