5 Tax Savings for Parents
The deadline to file your tax return is coming up fast, but that doesn’t mean you can’t make sure you’re getting all the tax benefits you deserve. For busy parents who are crunched for time, I’ve compiled a list of tax credits and exemptions that can help as you prepare your taxes and reduce your tax obligations.
The first way you can save on your taxes as a parent is taking the dependent exemption. The exemption is worth $3,900 per child when you file your taxes. This is a wonderful way to reduce your taxable income for the year. Please keep in mind that you must provide the correct social security number for your dependents when you claim them on your tax return.
Child and Dependent Care Credit
Did you send your child (under 13) to day care last year? If so, you may use this tax credit to claim up to $1,050 of child care related expenses you paid for one qualifying dependent or up to $2,100 for two or more dependents. To qualify both parents, if married filing jointly, must have earned income from wages, salaries, tips, and other taxable employee compensation or net earnings from self-employment income unless one spouse is a full time student or physically and mentally incapable of taking care of themselves.
Earned Income Tax Credit
Earned income tax credit can be a tremendous benefit for parents as it is a refundable tax credit. The maximum credit for 2013 for a family with 3 or more qualifying children is $6,044. To qualify for the credit, you must meet the income requirement (if your family’s modified adjusted gross income is a little under $52,000 you may want to look into it more).
Child Tax Credit
This credit is different than the Child and Dependent Care Credit. This non refundable credit can be worth $1,000 for each qualifying child (such as your son, daughter, stepchild, foster child) you claim under age 17. This can help to reduce or eliminate the taxes you owe for the year. Currently your tax credit is phased out at modified adjusted gross income over $75,000 for single and $110,000 married filing jointly.
Adoption is a wonderful way to expand your family, but the costs can be considerable. Fortunately, the federal government allows families to use a tax credit which is worth up to $12,970. Qualifying expenses include adoption, attorney, and court fees. You can also claim traveling expenses if they are directly related to the adoption.
Don’t worry about knowing all of these tax credits. TurboTax will ask you simple questions about you and give you every tax deduction and credit you deserve.
Thoughts on Saving on Your Taxes
I hope these tips help you as finish up your taxes. Are you taking advantage of all the tax credits you’re entitled to as a parent? What are some ways you managed to save on child related expenses?