While your children are young, you have a lot of expenses. Fortunately, some of these expenses may directly or indirectly into deductions, exemptions or credits can mean significant savings on your tax bill.
Take a look at the following tax benefits to see which ones might be beneficial for you.
1. dependency exemptions.
You can not take a deduction for the money you spend on food, clothing, shelter and other basic necessities for your children, but the dependency exemption decreases your taxes Just as the deduction would be.
in general, you can claim an exemption for each child or a parent who meets a certain set of tests that are claiming you as a dependent. In 2015, you can probably reduce your taxable income by $ 4,000 for each of your dependents.
If you have welcomed a new baby in your family this year, remember that you can ask the dependency exemption. It does not matter if the baby was born on 1 January and 31 December -. You can always take the exemption for the entire year
2. Children and tax credits for dependents.
The next big tax saver for many families is the child credit and dependent care expenses.
If you paid someone to care for your child or other eligible dependent while you worked or looked for work, you may qualify for a credit of up to 35 percent of the first $ 3,000 you paid the provider for a child. For two or more children, the credit can be as much as 35 percent to $ 6,000 in fees -. Which is a maximum credit of $ 2.100
The amount of your credit decreases as your income increases. If your adjusted gross income exceeds $ 15,000, the percentage used to calculate the credit is reduced. If your adjusted gross income exceeds $ 43,000, the percentage is 20 percent of expenditures.
You can take this credit until your child reaches age 13, you can take credit for children over 13 and other eligible dependents who are physically or mentally unable to take care of themselves. They must live with you for more than half of the year.
Instead of taking a credit, you may be able to use the dependent care benefits provided by your employer. These benefits may include contributions made by your employer to you or directly to the care provider. . You do not pay social security or income tax on this money, which makes for better tax savings that the child and dependent care credit.
Another advantage is many employers offer flexible care spending account dependents. You contribute pre-tax which is then used to pay for your child care expenses.
3. Child Tax Credit.
Thanks to a permanent extension, you may be eligible for a $ 1,000 child tax credit for 2015 and beyond. The credit is good until the year your eligible dependent turns 17.
He begins to phase out as income rises past $ 75,000 ($ 110,000 if filing jointly). For taxpayers in the lower tax brackets, the credit is refundable, which means they can get a refund even if the credit exceeds their tax liability on income for the year.
4. Earned Income Credit (EIC or EITC).
The earned income credit Moderate help low-income working families to make ends meet. This can mean a significant amount of money, depending on your income level.
For example, if you have three or more qualifying children, you may qualify for a maximum credit of $ 6.242 in 2015. This is a refundable credit, which means that you can get money back even if you have little or no income tax withheld.
To be eligible for income credit earned in a single, head of household, or spinning widow, you must have adjusted gross income of less than $ 39,131 if you have one child, $ 44,454 if you have two children, or $ 47,747 if you have three or more children.
If you are married filing jointly, you may qualify if you have adjusted gross income of less than $ 44,651 if you have one child, $ 49,974 if you have two children, or $ 53,267 if you have three or more children.
5. Adoption Credit.
If you have adopted or paid the adoption fees in 2015, the adoption credit can be a financial lifesaver. The repayment of credits qualified adoption expenses, dollar for dollar, up to $ 13,400 in 2015.
If your modified adjusted gross income is more than $ 201,010 in 2015, your credit is reduced. If it is $ 241,010 or more, you will not be eligible for this credit.
6. Head of household or qualifying Widow (er) filing status.
There is no deduction or credit, but it can save you money. If you are single, you should normally use the single filing status.
If you have a child, though, and you pay more than half the cost of maintaining a home for this qualifying child, you may be able to file as head of household. This is true even if the child's other parent claims the dependency exemption.
If your spouse died in 2013 or 2014 and you have a dependent child or the child living with you, you may be able to file as a qualifying widow (er). (If your spouse died in 2015, you typically produce a joint statement with him for the year.) You have to pay less tax by using one of these classification states that by filing as single.
7. tax education credits.
Children are not getting cheaper as they age, especially when they go to university.
tax credits for education can contribute significantly, however. The American credit opportunity, which expanded and renamed the Hope Scholarship existing credit can be claimed up to the first $ 2,000 you spend on tuition, fees, books, supplies and equipment for yourself , your spouse and your dependent children.
If you qualify, it also gives you 25 percent of the next $ 2,000 in credit. This means you could receive a total credit of up to $ 2,500 per eligible student. You can now use the American Opportunity Credit for four years of undergraduate studies for a child.
The amount of credit American Opportunity you can ask is reduced if your modified adjusted gross income exceeds $ 80,000 ($ 0,000 if you are filing jointly), and disappears when your modified adjusted gross income is more than $ 0,000 ( $ 180,000 for joint filers).
If you are not eligible for the American Opportunity Tax Credit, you may be able to take the Lifetime Learning Credit. This credit gives back 20 percent of tuition and certain related expenses up to $ 10,000.
No matter how many students are on your return, the more you can take in the Learning Credit for life is $ 00. The maximum credit lifelong learning, you can ask is reduced if your modified adjusted gross income exceeds $ 54,000 ($ 108,000 if you are filing jointly), and disappears when your modified adjusted gross income is more than $ 64,000 ($ 128,000 for joint filers).
you can not use the same expenses for a tax benefit of education and you can not claim both credits for the same student in the same year. You can not claim the American Opportunity Credit for up to four tax years for the expenses of the student.
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