With the cost of raising a child approaching a quarter of a million dollars, it's nice to know that the IRS is ready to extend a helping hand. The agency offers several tax credits for parents, some of which can easily add up to thousands of dollars in tax savings. Best of all, tax credits reduce your tax bill dollar for dollar -- unlike deductions, which simply reduce your taxable income.

Here are seven valuable tax credits that every parent should know about.

Child Tax Credit

The Child Tax Credit is available to any parent with children under the age 17 at the end of the tax year, assuming said children lived with you at least half the year. Typically the credit is $1,000 per child; however, if you exceed certain income limits ($110,000 for married taxpayers filing jointly and $75,000 for those who are single or head of household), the credit will be reduced based on your income.

The Child Tax Credit is a nonrefundable credit, which means it cannot be larger than the amount you owe in federal income taxes. For example, if you owe the IRS $500 and you get a Child Tax Credit of $1,000, then your tax liability will be eliminated, but you will not receive the remaining $500.

Jar full of $100 bills

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Additional Child Tax Credit

Although the Child Tax Credit can't exceed the amount of federal income taxes you owe for the year, if you have at least $3,000 in earned income for the year and qualify for the Child Tax Credit you are eligible for the Additional Child Tax Credit, which will allow you to claim the remainder. For example, if you qualify for a $2,000 Child Tax Credit but your tax bill for the year is only $1,500, then you can claim a Child Tax Credit of $1,500 and an Additional Child Tax Credit for the remaining $500.   

Earned Income Credit

Technically, a taxpayer without children could qualify for the Earned Income Credit, but only with an extremely low income. The more children you have, the more income you can earn without disqualifying yourself from receiving this credit -- up to $53,930 in annual income, in fact. The amount of the credit varies based on your filing status, how many kids you have, and your income for the year, but could be as much as $6,318 in 2017.

The Earned Income Credit is refundable; you can claim it even if you owe no taxes at all for the year. Parents can claim the EIC on Form 1040 or 1040A. To calculate your credit, use the EIC Worksheet (from the Form 1040/1040A instructions) or the IRS' online EITC Assistant Tool. Parents are also required to fill out and file Schedule EIC with their return.   

Child and Dependent Care Credit

If you hired someone to watch your kids while you worked, you may be eligible for a tax credit to reimburse you for part or all of those expenses. Your child must have been under age 13 at the time and must be your dependent. Also, the person you hired to watch your child can't be your spouse or your dependent (so you can't hire your 15-year-old daughter to watch her little brother and then claim this credit). The qualified expenses are capped at $3,000 per year if you have one qualifying child, or $6,000 per year if you have more than one.

The credit is calculated as a percentage of your qualified expenses; this percentage starts at 35% for taxpayers with adjusted gross income of $15,000 or less, and decreases by 1% for every additional $2,000 in AGI over $15,000 until it hits 20%, which is the percentage used by all taxpayers with AGI of $43,000 or more. 

American Opportunity Credit

Your older kids can get you some nice tax breaks, too. Consider the American Opportunity Credit. If you pay for qualified educational expenses for a student who is also your dependent, you can claim this tax credit against those expenses. The American Opportunity Credit is available for students who have not yet completed four years of postsecondary education, are enrolled in a program that leads to a degree, and are taking classes that equate to at least half a normal full workload. The credit is capped at $2,500 per student per year, and up to $1,000 of that may be refundable. You can claim this credit for up to four years, too.

Lifetime Learning Credit

If your older kid doesn't qualify you for the American Opportunity Credit, they may allow you to claim the Lifetime Learning Credit. You can claim this credit if you pay for qualified educational expenses for a student who is your dependent and is either in a postsecondary program or is taking classes to acquire or improve job-related skills. The Lifetime Learning Credit is up to 20% of the first $10,000 of qualified education expenses you paid for the year, so the maximum you can claim for one year is $2,000. 

Adoption Credit

Adopt a child, and you may qualify for the Adoption Credit. This tax credit covers certain adoption-related expenses, even if the adoption didn't go through. However, you can't claim the credit for expenses related to adopting your spouse's child. The Adoption Credit is capped at $13,460 per child and is nonrefundable. See IRS Form 8839 (link opens PDF) for details on how to calculate and claim the credit.

These tax credits are just a sampling of the tax breaks available to parents. You should seriously consider visiting a tax professional to learn more about the money you can save courtesy of your kids. Some of these credits are quite tricky to calculate, so a tax professional can save you a lot of time and headaches -- not to mention all the extra money you can get if they find some additional tax breaks for you to claim.