HOW TO LOWER YOUR TAXES WITH YOUR CHILDREN
Save money on your taxes with your kids! Housing tax and income tax can be lowered depending on your family. Indeed, French taxation is based on the concept of family quotient which is the number of shares by which the household income is divided for the calculation of tax. The more children you have, the lower your income tax will be. The objective of the family quotient is to reduce the income tax for tax households with one or more dependent children. It is calculated as follows: net taxable income / number of tax shares of the tax household. The family quotient allows taxpayers to determine their marginal tax bracket which will be used to calculate the tax, see changes to child tax credit. We can say that the family quotient corresponds to taxable income for 1 share.
CALCULATE THE NUMBER OF SHARES OF THE FAMILY QUOTIENT
A single person counts for a share. A married or PACS couple, without children, counts for two shares. Your first two children each count for an additional half share. At the first child, the number of shares is therefore increased to 2.5.
From the third child: an additional full share is granted.
If the parents are separated, they share the shares related to the children. Each parent is entitled to a quarter shares per child. The tax reduction from which you benefit via this principle of family quotient is capped this year at 1,567 euros for the half share of each child. A married couple with three children can deduct a maximum of 6,268 euros in income tax.
With the deduction at source, the change in the family situation of the tax household is taken into account very quickly. In case of birth, you have indeed 60 days to inform the tax authorities. The latter will have 3 months to calculate your new rate of withholding tax and communicate it to the collecting organizations.
SHOULD YOU ATTACH YOUR ADULT CHILD TO YOUR TAX HOUSEHOLD?
When your child turns 18, you must choose between keeping him in your tax home or asking him to complete his own tax return.
In fact, your adult child can be attached to your tax household until he is 21, and up to 25 if he pursues higher education. This choice mainly depends on the tax bracket in which your household is located. If your tax home is in the upper brackets of the scale, it is in your best interest to keep your adult child in your tax home as long as possible in order to benefit from the additional half-share. If your tax home is in the low brackets, which are increasing very quickly, it is better to ask your adult child to complete his own declaration. Indeed, if the child receives income and is attached to you, you will be taxed on it at the risk of pushing you into a higher bracket. By detaching your adult child from your tax home, you certainly lose half the share, but you can deduct from your taxes alimony equivalent to the cost of food and accommodation. This pension is capped at 3,500 euros if he lives at the family home and at 5,888 euros if he lives alone.
If your child has substantial income, know that he can be detached from your tax home, even if he is a minor. Very useful if you are the parent of a renowned you tuber or a talented entrepreneur who has higher incomes than yours.
Taxation: reduction on the housing tax with children
When it comes to the tax on your main residence, having children again gives you the right to a tax benefit. Each dependent child gives you a deduction for family expenses on your tax base. This reduction applies automatically.
Tax and school: tax reduction for tuition fees
Each of your children can also lower your income tax if they are in school. The tax reduction depends on your level of education: your high school student will save you 61 euros, and your high school student 153 euros. If your child goes on to higher education, the savings amount to 183 euros.