If you’re a parent, you probably agree that time flies way too quickly. It seems like you’re changing diapers one day and sending your kids off to college the next. With all the hustle and bustle of being a full-time parent, it’s easy to overlook financial shortcuts that can make your life a little easier. With tax season in full swing, knowing which tax deductions you qualify for will undoubtedly relieve some of your financial burdens.
Here are the most common parent tax deductions and credits that you should keep in mind while filing your taxes this year.
- Adjust your withholding status: Adding a new child to your family can change how you file your taxes. If you recently had a baby, remember that you might be able to adjust your withholding status at your job. Update your W-4 to decrease the amount of taxes taken from your paycheck.
- Child and Dependent Care Credit: If you’re going back to work or school and will be paying for child care, you can use this credit to claim up to 35% of $3,000 in expenses or $1,050 for one child. You can claim expenses ranging between 20% to 35% of $3,000 for one child, or $6,000 for two or more children.
- Child Tax Credit: You also might be eligible for the child tax credit, which reduces your taxes dollar for dollar. This is an additional $1,000 credit you can claim for your children under the age of 17.
- Deduction for Dependent Children: If you have a natural or adoptive child under the age of 19 that lives with you for more than half the year, you can deduct up to $4,050 for them. If your child is a full-time student, you can claim him or her as a dependent as long as they are under the age of 24.
- Earned Income Tax Credit: This tax credit reduces your tax liability based on your income and family size. The EITC is a tax credit given to taxpayers that earn low to moderate income from a job or being self-owned business. It can eliminate your income tax liability, and if the credit is more than the amount of tax you owe, you can potentially receive a tax refund. The amount of the credit you receive is based on your filing status, the number of dependents you have, and your income level.
Children are expensive, but these tax breaks can really help you out. Don’t miss out on these opportunities to save some serious cash. File your taxes today, and save big.
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