If you’re a parent, then you probably already know that kids
can be pretty darn expensive! The good news, however, is that there are ways to
cut back on the costs of having kids. One thing you can do to save money, for
example, is to take advantage of the many tax credits and deductions that exist
for the moms and dads of the world. Below, you’ll find the details on some of
the very best ways for parents to save on their taxes!
The Dependent
Deduction
As long as your little (or not so little) one qualifies as a
“dependent,” you’ll qualify for the dependent exemption. This exemption enables
you to reduce your taxable income and thus lower the amount of taxes you owe.
In order for a child to count as a dependent, he or she must
be under 19 or under 24 if the child is a student and financially dependent on
you. Also, bear in mind that dependents
who are permanently disabled are not limited by the age restriction.
Dependent Care Credit
Dependent care or child care can get very expensive. However,
for many people, it’s an absolute necessity. Fortunately, though, there is a
tax credit that allows you to deduct the money you spend on child care or
dependent care from your taxes.
This credit, known as the child and dependent care tax
credit, is for people who:
· - Pay for childcare for children under 13
· - Are able to work or look for work as a result of
the childcare or dependent care
· -Earned income during the tax year
If you meet these basic qualifications, you can talk with
your tax advisor to learn how to make the most of this credit.
Adoption Tax Credit
If you chose adoption as your route to parenthood, then you
can recoup some of your costs through the adoption tax credit. Your income will
determine your eligibility, however, so research the credit and talk with your accountant before just assuming you qualify. You’ll also need to determine,
based on various factors, the exact amount of credit you are able to claim. In
general, though, most people can earn tax credit for:
· - Relevant legal fees
· - Relevant meal
costs
· -Relevant travel costs
· -Relevant lodging fees
Just make sure you have proof of any expenses you claim.
Keep receipts or other proof stored away in case of an audit.
Student Loan Interest
Deductions
Higher education is expensive, and if you’re footing all or
part of the bill for your child via student loans, you may qualify to deduct
interest payments made on some loans. If you do qualify, the deduction can
greatly reduce your amount of taxable income.
Loans must be from a legitimate lending institution and must
have been taken out while your child was enrolled part-time or full-time in a
degree-earning higher education program.