As parents know, children are one of life’s greatest joys, but they can also be one of life’s biggest expenses. From medical bills when they’re born to their education as they grow, children require a lot of financial planning and investment from their parents. Luckily, there are several tax deductions available to ease the financial burden and help families plan for their futures.
The most well-known tax savings is available through the dependency exemption. For each qualifying dependent, taxable income is reduced by up to $4,000. Additionally, parents may be able to take advantage of the child tax credit, which offers a maximum credit of $1,000 per qualifying child.
Additional tax incentives are available for working parents through the Earned Income Credit and the Dependent Care Credit or Dependent Care Flexible Spending Account. For parents who adopt, a tax credit is available to help cover expenses associated with the adoption process. The Lifetime Learning Credit and the American Opportunity Tax Credit can also be utilized to offset higher education costs.
Taking advantage of tax credits can help parents to prepare for the wants and needs of their children from birth to adulthood. For more information on tax credits for parents or to find out what deductions you qualify for, contact the tax services professionals at LaPorte.