Get a Deduction Just For Your Kids
If you’re a parent, you may find some comfort in the fact that your children can actually save you money. While most of your parenthood is spent, spending, the IRS offers you a tax deduction just for having kids. The following tax savers may come in handy for your family, as far as putting a little extra cash back into your budget.
- Child Tax Credit allows parents to deduct $1,000 per child under the age of 17. Taxpayers who are married and file jointly with an AGI more than $110,000 may be eligible for a reduced credit of $50 over the AGI limit.
- The dependent exemption allows parents to save $4,000 per eligible child, in so much so that that amount of the parents’ income will remain untaxed. Generally, taxpayers in the 25% bracket can save $1000.
- The Child and Dependent Care Credit can save parents who pay for care of their child while they work. There are certain requirements that must be met in order to claim the expenses, and can be worth up to $600 for one dependent.
- The Adoption Tax Credit is excellent for those who adopted a child during the tax year. This tax credit can cover $13,190 worth of adoption expenses, and has certain limitations for parents at specific income levels.
- If you chose to employ your own child, under the age of 18, following specific child employment protocol, you may be able to save money at tax time. While you have to file a W-4 and complete all paperwork for employing a child, you may be able to save tax dollars by paying up to the maximum standard deduction, before you’re required to pay employment and income taxes.
