Tax Tips for Parents

Parents have many tax benefit opportunities.

During tax preparation time, having children means you are eligible for special tax deductions and tax credits. You should know what you can claim and how to maximize those deductions and credits. Tax preparation software or a tax professional can help.

Features

You can deduct every child who qualifies as a dependent. This deduction does not apply if your income is above a certain level, which can change from year to year.

Types

You can receive a tax credit for every dependent child. Parents with three or more children get an additional credit. A tax credit reduces your tax bill, while a deduction reduces your taxable income. A tax credit is usually more beneficial. This credit is also limited by your income level.

Considerations

If you have children younger than 13, you may receive a credit for childcare expenses. In addition, if your employer offers a flexible spending plan, you can deduct some of your pretax earnings to spend on child care.

Expert Insight

Donate the clothes your kids outgrow to receive a charitable deduction. Make sure what you donate is in good shape, and estimate a fair market value. You can use the Goodwill website for help determining the worth of your donation.

References

• Parenting: 5 Tax Tips All Parents Should Know
• IRS: Tax Information for Parents
• Consumer Reports: Tax Breaks for Parents

Resources

• Goodwill