Multigenerational Families: Top Family Tax Deductions and Credits You Should Not Miss

Tax Deductions and Credits

The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline. Tax information below will change next year under the new tax law effective on your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.

This post can be found en Español here.

For practical, cultural, and personal reasons, more families are living in multi-generational homes. According to an analysis of Census data, over 60 million Americans share a roof with their families.

While having so many under one roof can sometimes be chaotic, the benefits usually outweigh the chaos. If you’re filing your taxes this year, you may discover that there are some significant family-related tax benefits you can take advantage of. Make sure you get the tax deductions and credits you’re due when you sit down to file your taxes.

Making a House a Home

Do you own a house or did you buy a home last year? If so, check to see if you’re eligible for some tax deductions.

  • Points: If you have paid points (sometimes called origination fees) to get a specific rate from your lender, you can deduct them from your taxes. If you paid points when you purchased your home you can deduct your points in the year you paid them. If you refinanced your home you have to deduct the points over the life of the loan.
  • Interest: Itemizing your deductions? You can deduct the mortgage interest paid during the tax year.
  • Property Taxes: Property taxes can get really expensive, but if you paid them you can deduct them on your taxes. For tax year 2018 (the taxes you file in 2019), your state income tax withholding, sales and local income tax, and property taxes cannot be more than $10,000 in total under the new tax reform law.

Cherish Your Children

There are several tax benefits that you can use as a parent when filing your tax return.

  • You can deduct a $4,050 dependent exemption for your child (if they 19 or younger or 24 or younger if attending college). For tax year 2018(the taxes you file in 2019), the dependent and personal exemption is eliminated.
  • If your child (under 13) was in daycare last year, you may use Child and Dependent Care Credit to claim up to 35% of $3,000 in childcare related expenses ($6,000 in childcare related expenses for two or more dependents).
  • You can claim $1,000 per dependent child under 17 with the Child Tax Credit. For tax year 2018 (the taxes you file in 2019), the Child Tax Credit is increased to $2,000 per dependent child.
  • If your kids are in college and are dependents, look into the American Opportunity Tax Credit (AOTC). This is a refundable tax credit up to $2,500 per student.
  • If they don’t qualify for the AOTC, then check out Lifetime Learning Credit. This tax credit can help with tuition-related expenses for up to $2,000 per tax return.

You’d also want to set aside a few minutes to check with your Human Resources department to make sure you’ve filled out your w-4 correctly and are having the proper amount withheld from your paycheck especially with the changes under the new tax reform law which impacts your income your receiving in 2018 and your 2018 taxes.

Looking Out for Grandparents

Did you financially provide financial support for your parents or grandparents? If so, then you may be able to claim them as dependents on your taxes. In general, to be considered a qualified relative:

  • You must have provided more than half their support
  • Their taxable income for last year must be less than $4,050

Please note if you claim them as a dependent, your parent or grandparent cannot claim a personal exemption on their own tax return.

Thoughts on Family and Finances

No matter your family arrangement, make sure you’re getting the most financially by claiming the tax deductions and credits you deserve. The money saved can be used to take care of your loved ones!

And don’t worry about knowing all of these tax deductions and credits. TurboTax will ask you simple questions and give you the tax deductions and credits you deserve based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can even review, sign, and file your tax return.

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