6 money-saving tax breaks for parents
by Melissa Brodsky
There’s more to family than just the warm and fuzzies. While your loved ones, in particular your kids, are absolutely priceless, they are expensive little beings. The good news is there are tax breaks you can take to put some money back in your pocket for a change or at least lower the amount you owe to the IRS.
1. Easy Exemptions
Your dependent children count as exemptions on your tax return. You can claim an exemption of $3800 for each of your dependents. And guess what? You can take this deduction for yourself and your spouse as well. This means a two-parent household with three children can deduct $19000.
2. Child and Dependent Care Credit
Have child care expenses for a dependent under 13 years old? You can claim 20 to 35 percent of your child-care costs for expenses that total up to $3000 for a single child and $6000 for two little tykes. Of course, the amount you can claim depends on your household income.
If your income totals more than $43000, your tax break will amount to significantly less.
3. Child Tax Credit
If you have kids under 17, you may also qualify for the child tax credit, which amounts to $1000 for each of your children. And unlike the child and dependent care credit, you aren’t limited to claiming just two of your little darlings. You can take the credit for each member of your brood. There are some income restrictions on this, however, and the credit is phased out the higher your income goes.
4. Tuition and Fees
If you’re helping your offspring pay for college, you may be eligible for one of two education credits. First, you can deduct a portion of the tuition and required fees you pay for junior. The amount you can deduct will depend on your adjusted gross income. The deduction phases out, however, for taxpayers with very high adjusted gross incomes.
5. Education Credits
You may be eligible for the American Opportunity Credit or the Lifetime Learning Credit. The American Opportunity Credit is worth up to $2500 for each qualifying student in your household. It’s available for students who are in their first four years of college. The Lifetime Learning Credit, which is worth up to $2000, is good for students who are in graduate school as well as adult students taking classes through a community college. You can only take this credit for one student each year, however. As with many other credits, both education credits phase out for households with higher incomes.
6. Earned Income Tax Credit:
This is a refundable credit, which means it can help you get a refund, even if you don’t actually owe any taxes. The amount depends on your income and family size; it’s higher for families with more children. This credit is available to married taxpayers with incomes under $50270 and singles with incomes under $45060.
If you’re filing taxes yourself, TurboTax is one of the most popular programs.