Being a parent isn’t easy. Between all the time and energy and money that can go into raising a child, it’s a wonder that parents are able to do anything else. Few people on this earth deserve a break every now and then like parents do: Luckily, when it comes to taxes, they get quite a few breaks!
At Hacker Accounting, we take pride in helping our clients save money on their taxes. If you’re a parent, there are several different tax credits and breaks out there that can help give you financial relief. Here are the top seven tax breaks for parents.
You can claim your child as a dependent for a sizable tax break. Your dependent child must be under the age of 19. There’s one exception to this rule: If they’re a full-time student, you can still claim them as a dependent until they turn 24. For divorced parents, the exemption usually goes to whichever parent has custody of the child for most of the year.
Child and Dependent Care Credit
You can get a credit of 20-35% of your child care costs if you paid for child care last year while either working or looking for work. Care for any child under the age of 13 is eligible, and is also applicable to after-school care and day camps during summer vacations. It does require, however, that both parents must be working or actively seeking employment to qualify for the credit.
Child Tax Credit
This credit shaves up to $1,000 off of your tax bill for every child under the age of 17. In order to qualify, your child must live with you for at least half of the year and must be claimed as your dependent. This credit does not apply to married couples filing jointly with incomes above $110,000, for a single head of household with an income of $75,000+, or for a married person filing separately with an income over $55,000.
Did you know that your child’s college dreams can be a tax benefit? You won’t get anything extra if you start a 529 plan, so don’t expect any huge tax breaks or bonuses. It does make it so that the money you set aside for your child’s education can grow tax-deferred; Some of these plans can also be eligible for tax deductions, depending on the state you’re in. So long as you don’t exceed a certain amount within a set period of time, you can grow your child’s future college fund without worrying about any gift taxes or other penalties.
Medical Mileage Deduction
Keep track of all those doctor appointments, parents: They can earn you a tax break. You can deduct travel expenses that are related to medical visits. There are a few restrictions: You can’t deduct the mileage you use to take your child to the doctor for a normal check-up but you CAN deduct it if the child is sick. You can deduct the cost of gas, tolls, and parking fees related to the visit.
American Opportunity Education Tax Credit
This is a credit that’s available until 2017. It gives parents up to $2,500 per student for fees, books, tuition and other education supplies (including computers!) for each of the first four years of post-secondary education. It is only available to individuals who earn no more than $80,000 and for couples earning no more than $160,000.
Lifetime Learning Credit
You can take the Lifetime Learning Credit if your child opts to pursue a certification program instead of attending college. This applies to nondegree and other professional training programs. It offers a max benefit of $2,000. It’s income eligibility is capped at $61,000 for single tax filers and $122,000 for joint filers. It’s limited to one credit per household.
Want More Tax Breaks For Parents?
Want more information about which tax breaks you qualify for? Give Hacker Accounting a call at 602-375-5251.