Anchor Intro: I’m Kristin Arnold with Bankrate.com. Raising children isn’t easy … or cheap. But this time of year, those dependents can save you money on your taxes. And now the rules about who qualifies as your dependent have changed to better reflect our society.
Voiceover 1: For most of the year, your kids are costing you. But tax-time is payback, when kids and other people you support become tax deductions.
Voiceover 2: They’re called dependents: people you support. Every dependent you claim reduces your taxable income by $3,400.
Voiceover 3: And every $3,400 off your income could put up to $1,000 in your pocket.
Voiceover 4: It’s not child’s play to understand who’s a dependent and why: The rules are complicated. Example? A few years back the IRS said to claim kids as dependents, they had to be yours. But a couple of months ago, they backed down: Now you might be able to deduct any kids you support, even someone else’s.
SOT: “My girlfriend lives with me and has children. And I furnish all of their support. In 2005, I lost their dependency. With this change, I’ll be able to claim those children again as long as my girlfriend does not have any income and does not file a tax return.”
Voiceover 5: Big benefit for some this year … and it gets better. Because if you qualify you can go back and amend returns in ’05 and ’06 too.
SOT: “I can claim those kids for ’07 but I can also go back and correct … amend my returns for 2005 and 2006 if the same situation applied.”
Standup: This change could literally be worth thousands. So if you’re fully supporting kids that aren’t yours … or did in the last few years … talk to a pro. For Bankrate.com, I’m Kristin Arnold.