Multigenerational Families: The Top Family Tax Credits and Deductions You Shouldn’t Miss.

More families live in multigenerational homes for practical, cultural and personal reasons. A 2018 analysis of 2016 Census data shows that 64 million Americans share a roof.

Although it can be chaotic to have the entire family living together, the benefits often outweigh the inconveniences. You may be able to take advantage of family-related tax benefits when you file your taxes next year for 2021. When you file your taxes, ensure you receive all the tax credits and deductions you are eligible for.

Make a House a Home

Are you a homeowner, or did you buy a house last year? You may be eligible for tax deductions if you own a house or bought one last year.

• Points If points were paid (sometimes called origination fee) to obtain a rate from your lender, they can be deducted from your taxes. You can deduct points paid when you buy your home. Refinanced homes are subject to the same rules as a mortgage.
• Interest: Mortgage interest is most likely paid by homeowners who have taken out a mortgage to purchase a house. The mortgage interest paid in the tax year reported on Form1098 can be deducted.
• Property taxes: If you have paid property taxes, you can deduct them from your taxes. Your property taxes, state income tax withholding, sales, and local income taxes cannot exceed $10,000 for the tax year 2021 (or $5,000 if married, filing separately). This is under tax reform.

Love Your Family

You can get tax benefits as a parent by filing your tax return.

• You could claim Child and Dependent Care Credit if your child is under 13 years old. You can claim 50% of $8,000 for childcare-related expenses (from the last 35% of $3,000) for one child and 50% of $16,000 for two or more children.
• Working parents can get a significant credit with the Earned Income Tax Credit. A credit of up to $6,728 may be available to a family with three children. The Earned Income Credit is the largest program available for working Americans. Last season, the federal Earned Income Tax Credit was awarded to more than 25 million tax filers. The average Earned Income Tax Credit received by a filer was $2,461.
• Tax reform eliminated the dependent exemption. However, you may claim $3,000 for any qualifying dependent child aged 6+ and $3,600 per child 6 and under with the Child Credit. For the first time, children under 17 years old will be eligible for this credit under the American Rescue Plan. Many families received advances in the Child tax credit from July 2021 through December 2021. You may be eligible to receive a $500 credit for non-child dependents if your children are 18 years old or older.
• The American Opportunity Tax Credit is available to dependents of college students. This tax credit is refundable and can be used for up to $2,500 for students in the first four years.
• If your dependent is not eligible for the AOTC, you can check out LifetimeLearning Credit. This tax credit can be claimed regardless of whether your dependent takes only one college class.