A number of factors affect child care tax savings: the number of children in a household and and the yearly salaries of families. Families reporting an income over $110,000 have had their child tax credits phased out. States with higher incomes are likely to earn less from the child care tax than states where incomes are lower.
In general, states that largely vote Republican are more likely to benefit from the child-care tax because Republican states tend to have more married households with children. Eastern states, primarily New York and D.C. are cited as areas with higher rates of single households. And Florida's retirement population renders that state low in terms of savings reaped from child-care tax benefits.
Children who lived with their parents for more than half of 2010 qualify as exemptions for the child tax credit as do adopted children. There is an adoption tax credit in place for credits meant to address adoption costs.
There are limits on the child tax credits if the taxes and alternative minimum taxes (line 46 of form 1040) totals less than the credit. Married couple's filing jointly who've earned more than $110,000, have tax credit limts as to single head of households with incomes over $75,000 and married filing separately totals $55,000.
Families who get less than the full amount of the child tax credit can file for additional child tax credits.
Parents who have hired help to care for their dependents while they were out looking for work can file the child and dependent care credit. Some will also need to file the earned income tax credit portion of their income tax forms. The Earned Income Tax Credit benefits people who work and have earned income from wages, self, employment or farming.
Higher education tax credits are worth noting when filing taxes because this tax reduces taxable income. Parents who have taken out student loans for themselves or their children may also be able to deduct the interest paid on qualified student loans.
Image source: U.S. Army