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 on 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 that year.
- Property Taxes. Property taxes can get really expensive, but if you paid them you can deduct them on your taxes.
Cherish Your Children
There are several tax benefits that you can use as a parent when filing your tax return.
- You can deduct $4,050 as a dependent exemption for your child (if they 19 or younger or 24 or younger if attending college).
- If your child (under 13) was in day care last year, you may use Child and Dependent Care Credit to claim up to 35% of $3,000 in child care related expenses ($6,000 in child care related expenses for two or more dependents).
- You can claim $1,000 per dependent child under 17 with the Child Tax Credit.
- 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. TurboTax has a W-4 withholding calculator to help you figure out how many withholding allowances you should take.
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 gross 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 have to know 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. TurboTax checks for over 350 of them.