Stay-at-home parents may think they don't have the same tax breaks as working parents but that's not true. Having dependents opens you up to several tax exemptions, credits and deductions. Stay-at-home parents can take advantage of the basic kid exemption and credits. In fact, if they're in the process of looking for work, a stay-at-home parent can even take the child care credit.
The first tax break a stay-at-home parent gets is an exemption for each child she has. Many mistakenly believe that the federal government taxes you on every dollar you receive in income. However, you can deduct $3,650 for each dependent you claim, including each of your children under the age of 19.
Child Tax Credit
In addition to the exemption, all stay-at-home parents get a child credit added to their tax return for each of their children. The child must be age 16 or under by the end of the tax year in question and must be eligible to be claimed as a dependent on your tax returns. Also, you and your spouse must make less than $110,000 in that tax year if filing jointly or less than $55,000 each if filing separately.
Dependent Care Credit
Not all stay-at-home parents intend to stay that way. If you're looking for a job and need child care during your job search, you can deduct it from your taxes. The child and dependent care credit allows up to $3,000 in deductions from your taxable income. However, the care provider must be over 19 and not be a spouse or the other parent of the dependent in question.
Tuition and Fees Deduction
Stay-at-home parents may have children of varying ages. If one of yours is old enough to attend college, you can deduct any fees or tuition you pay for him from your taxes. It must be for someone you claim as a dependent on your taxes. You can claim up to $4,000 in deductions for expenses, but you can't include insurance, transportation or room and board.