Tax season can be overwhelming, especially for parents juggling family responsibilities and finances. The good news is that there are several tax-saving strategies for parents that can simplify the process and reduce tax burden. Let’s take a closer look at these opportunities.
3 Tax Credits Parents Can Benefit From
The tax code provides multiple ways for parents to save on their taxes with credits and deductions. Here are three credits the IRS offers that can help save your family money.
1. Child Tax Credit
For the tax year 2024, you can claim up to $2,000 per qualifying child with the Child Tax Credit. Qualifying children must be under the age of 17, have a Social Security number, be claimed as a dependent on your return, and meet several other requirements. You can qualify for the full amount of the Child Tax Credit for each child if you meet the necessary eligibility requirements and your annual income does not exceed $200,000 or $400,000 if filing jointly. If you make more than this, you won’t qualify for full credit, but you may be eligible for partial credit.
Additionally, if you owe no tax, a portion of the Child Tax Credit is refundable through the Additional Child Tax Credit. The Additional Child Tax Credit may provide a tax refund of up to $1,700 per qualifying child.
2. Adoption Credit
Expanding your family through adoption is a life-changing event, and the Adoption Credit can help reduce the financial burden of adoption-related costs. For the tax year 2024, parents with eligible children can claim up to $16,810 for qualified adoption expenses. Unlike the Child Tax Credit, this credit is totally non-refundable, meaning you can’t get back more than you owe in taxes. Additionally, if your employer provides adoption benefits, you can exclude up to $16,810 from your taxable income.
3. Child and Dependent Care Credit
The Child and Dependent Care Credit helps parents cover childcare expenses so they can work or search for employment. You may be eligible if you have children under 13 or a spouse or dependent of any age who cannot care for themselves. The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying individuals.
The Best Way To Maximize Your Tax Savings
If you’re eligible for any of the tax breaks mentioned above, don’t miss out on the opportunity to claim them and maximize your tax return. Be sure to research the latest tax codes each year, as they can change, and new opportunities may become available. Remember, even if you’ve claimed certain breaks in the past, it’s always worth reviewing your eligibility annually to ensure you can still claim them.
Working with a tax professional is the best way to ensure you’re optimizing your tax benefits, taking advantage of tax deductions, and fully understanding your eligibility. At Royal Oak Financial Group, our team of tax planning specialists will guide you through every step of the tax process. Contact us today to learn more about our services.
