Death and taxes may be the only things that are certain in life, but just when you kick the bucket and how much you kick back to Uncle Sam over your lifetime depend on a wide variety factors. The U.S. tax system is a confusing web of brackets and credits, many of which shift over time depending on who's running the show in Washington, D.C. That said, it pays to keep up to speed with tax code opportunities and changes. For parents, one of the most important sources of savings is the child tax credit. The program can reduce a family's tax bill by up to $1,000 per child.
The child tax credit was created by U.S. lawmakers in 1997 as a way to help families offset the costs of raising and caring for kids. It is separate from any deductions that a family might take on their tax return related to child care and other expenses and applied on a dollar-for-dollar basis. A family with one qualifying child who's entitled to the full $1,000 credit, for example, will have their taxable income reduced by $1,000 [source: Center on Budget and Policy Priorities].
The credit generally applies to child dependents under the age of 17 at the end of the year for which taxes are being collected. The amount of the credit, which varies based on income, is simply subtracted from the amount owed by a qualifying family. If the credit is more than what the family owes, they can get a refund check from the government [source: Center on Budget and Policy Priorities].
Next time little Johnny starts drawing on the living room wall with crayons, screaming at the top of his lungs at 3 a.m. or loading up his diaper just as you get to the park, remember: he's making you cash.