Income Tax: What You Can Deduct
The tax man cometh. But are you taking advantage of all the credits to which you’re entitled? The cost of child-rearing is mind-blowing, which is why Uncle Sam feels inclined to cut you a break — literally. Before you complete your taxes this year, make sure you’ve taken advantage of these tips for you filing. Are you aware of the child and dependent care credit ? If your child is in daycare, you can report up to $3,000 for one child and $6,000 for two children. You must identify the person or organization which cares for your child. Although some parents stop claiming these costs when their children begin school, they still qualify for a credit if the child is in summer camp. The only catch with the child and dependent credit is that both parents must be working, seeking employment or going to school. Do you set aside money for child’s college education? If you are dumping money into a 529 college savings account, you may be able to write this off. In some states, you can write off up to $5,000 if you’re filing single and $10,000 if you’re filing jointly. Check with you state to see what kind of tax breaks they give for college savings contributions. If you’re one of the lucky new parents who adopted a child last year, you can get back some of the monies you spent on the process. Parents of newly adopted children receive a tax credit for up to $12,150, provided your income isn’t too high. For more information, visit the website of the Internal Revenue Service. If you’re unsure of any other circumstances that might entitle you to tax credits, contact the IRS or an accountant to learn more. You might just find some extra dollars in your tax refund this year.