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Money-Saving Tax Tips Every Parent Wants to Know

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Barbara DelinskyGuest Blogger
March 14, 2017 · 580 Views

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Raising a child is damn expensive these days. But, having a child is a blessing, especially during the tax season. It’s because you’re eligible to get tax credits and deductions for your parenting expenses. Uncle Sam knows the plight behind raising a child. That’s why it has kept a number of tax benefit options open for parents to make the most of their money during the tax time. Check out the options below!

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money-saving tax tips every parent wants to know


1. Dependent exemption

Since your child is dependent on you, you’re eligible for a dependent exemption. A tax exemption lowers your tax obligation by reducing your taxable income. To qualify, your child has to be under 19 years at the end of the year or under 24 years of age if he/she is a student. However, the age restriction doesn’t apply if your child is permanently disabled.

An extra dependent is likely to cut back your tax bill. If you’ve become a parent recently, consider filing a new W-4 form with your employer to cut off tax withholding allowances from your paycheck.

 

2. Child tax credit

Child tax credits can trim your tax bill up to $1,000 for each dependent child. To qualify for a child tax credit, your kid must fulfill the below criteria:

  • He/she has to be under 17 years of age at the end of the year

  • He/she must be your own, step or foster child

  • He/she should fulfill the criterion of dependent exemption

  • He/she must be a US citizen, national or resident alien

  • He/she should be living with you for the most part of the year

 

3. Earned income tax credit

If you are a parent, you can get qualified for earned income credit (EIC). However, the tax credit amount depends on your income for the tax year and the number of children you have. Plus, the EIC may get you a tax refund if your tax obligation is zero.

 

4. Child and dependent care tax credit

You can qualify for a child and dependent care tax credit if you meet the following criteria:

  • You make child care expenses for a child who is under 13 years old at the end of the year

  • You’re required to work or look for a job to meet the child care expenses

  • You and your spouse need to have a source of income during the tax year in order to claim the child care tax credit

 

5. Adoption tax credit

If you are thinking of adopting a child, go ahead since you’ll get some tax benefits for it. If you adopt a child with special needs, you can claim the entire adoption cost. The adoption tax credits that you can qualify are:

  • Court and attorney fees

  • Related meal expenses

  • Related travel costs

 

6. Higher education tax credits

You are eligible to get two tax credits for higher education of your child. These are:

  • The American Opportunity Tax Credit (AOTC)

  • The Lifetime Learning Credit (LLC)

Expenses that qualify are:

  • Tuition fees

  • School materials

  • Enrollment fees

You can use the AOTC for four years and the LLC as long as you child is continuing an eligible degree program.

 

7. Student loan interest deduction

What a golden opportunity! Isn’t it? You can get an interest payment deduction on certain student loans. For that, the student loan must be taken from a qualified lending institution and your child must be enrolled in a degree program for a certain period of time.

 

8. Health insurance premiums

If you pay for your child’s (who is under 27 years of age) health insurance premiums, you can get a 100% deduction on that cost. You can claim this deduction only if you and your spouse aren’t eligible for an employer-paid plan.

 

So, before filing taxes, check out how you can lower your tax bill and get a higher refund for your parenting expenses. However, due to any reason, if you’ve incurred tax debt, you can reduce your overall tax bill with the help of tax relief options. But, it is always better to make your tax payments on time.


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Barbara Belinsky has written for many blogs. She has expertise in writing personal finance articles and is an active participator on social media. While she is not writing, she spends most of her time exploring new places, people & their culture. Get in touch with her on twitter @DelinskyBarbara or you can mail her at bdelinsky00@gmail.com

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