If you are a parent, you can lower your tax burden significantly. Eight different tax credits and deductions are out there that can help lower your tax burden:
In most cases, a child can be claimed as a dependent in the year they were born. Be sure as a parent to state if your family size has increased this year. You may be able to claim the child as a dependent.
Child Tax Credit
You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you could be eligible for the Additional Child Tax Credit. The Additional Child Tax Credit is a refundable credit and could give you a refund even if you don’t owe tax.
Child and Dependent Care Credit
You may be able to claim this credit if you pay someone to care for your child under age 13 while you’re busy with work. Be sure to note your child care expenses so we can claim this credit.
Earned Income Tax Credit
The EITC is a benefit for people who work and have earned income from wages, self-employment, or farming. EITC reduces the amount of tax you owe and may also give you a refund.
You may be able to take a tax credit for qualifying expenses paid to adopt a child.
Coverdell Education Savings Account
This savings account is used to pay qualified expenses at an eligible educational institution. Contributions are not deductible, but qualified distributions are usually tax-free.
Higher Education Credits
Education tax credits can help with the cost of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax.
Student Loan Interest
You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income, so you do not need to itemize your deductions.
Make sure as a parent you’re getting the right credits and deductions by speaking to Williams & Kunkel CPA. Call us today in Flower Mound at 972-446-1040 to have a chat.