Tax Tips for Parents

Brace yourself, tax season is getting started. New and expectant parents are surely wondering how their taxes will change now that they have a little one on board. With all the money we spend on our kids, it's a relief that the IRS gives us a few breaks. Here are some tax breaks that every parent should know about:

• Adding a dependent to your tax return will only offer you a tax credit if you are below a certain income level (it’s about $55,000 a year if filing separately and $110,000 a year if filing jointly). If you have three or more dependents, then the credit will be higher. 

•  If your employer offers a flexible spending plan (allowing you to set aside tax-free dollars) then you can allocate some of that income to childcare. Even if you don’t, though, all parents with children under the age of 13 may also receive a tax credit for their childcare expenses. 

• Donate your child’s old clothes, toys and furniture and make sure you get a receipt. Donating these items to a charity like the Goodwill will allow you to make more deductions to your tax return. Use the Goodwill website to estimate the fair market value of your donations.

• If you are self-employed, then you can deduct the costs of your health insurance, including coverage of any dependents under the age of 27. 

Single Parents

•  Filing as “Head of the Household” will garner you additional savings if you have been unmarried as of the last day of the tax year and take care of your children at least 50% of the time. Be aware, though, that only one parent can file their taxes with a child listed as the dependent.

Have you found any other ways to save money on taxes as a parent?

Tax Tips for Parents [EHow]
Tax Breaks for Single Parents [About.com]
Ten Tax Tips for Parents [ABC12 News}
Claiming the Child Tax Credit [About.com]