This post is also available in: Español
As a parent, there are many things to consider when filing your taxes and the rules and considerations change as your children become older and start earning their own money or head off to college.
That is why I have partnered with TurboTax to share with you some great tips for parents to save on taxes as well as what to look for in terms of credits and deductions as well as what to take into account when it comes to teens and young adult children.
Tax credits and deductions for parents can greatly reduce your tax bill and increase your tax refund when tax time arrives. However, knowing what tax credits and deductions you qualify for can be tricky, especially when kids are getting older and starting to make their own money or in college.
Tax credits and deductions for parents
As a parent, it’s important to know what tax credits and deductions you qualify for.
- Child Tax Credit: this credit provides you with a tax break of up to $2,000 for parents and $500 for a non-child dependent.
- Child and Dependent Care Credit: you can claim a deduction on daycare costs for kids under the age of 13, or for senior parents or an incapacitated spouse or dependent. You can claim a deduction of up to $3,000 for one child or up to $6,000 for two or more family dependents.
As your kids get older and set off to college there are some tax credits and deductions that you can also consider, which do not apply to younger kids.
- Student Loan Interest Deduction: This tax break allows U.S. families to deduct up to $2,500 on interest paid on student loans.
- American Opportunity Tax Credit: College households can claim $2,000 in federal tax deductions on assorted college costs — think tuition, meal plans, textbooks and fees. Qualified taxpayers can also claim an additional 25% of $2,000 more paid out in college costs.
These are just some of the credits and deductions available to parents and families and every situation is different. It’s always good to be informed, however when you file with TurboTax you don’t need to know about all the tax laws because TurboTax looks for the deductions and tax credits you qualify for based on your answers to Simple Questions about your life.
Tax considerations for working teens
As kids get older and they start making their own money by working summer jobs, babysitting or in my kid’s case doing some work to help me with the blogs there are new things you have to consider when tax time comes around. Your minor who may be claimed as a dependent has to file a return once their income exceeds their standard deduction. For the tax year 2018 this is if the amount earned is greater of $1,050 or the amount of earned income plus $350. Rules change though if your child is self-employed or is earning dividends on investments and it’s hard to keep up as laws are always changing. So, if your child or teen is already earning his own money be sure to check with an expert to make sure your child doesn’t owe any taxes! One of the reasons why I love working with TurboTax Live is that I get the support of a tax expert who can answer all of my tax questions in English and Spanish. I got all of my questions about my kid’s earnings answered quickly and the tax expert I talked to was so patient, knowledgeable and helpful.
How to save when you file your taxes
Getting your taxes done right to get your best refund
By filing your taxes correctly you ensure that you get all of the money you qualify back when you get your refund. By filing with TurboTax you can file with confidence knowing your taxes are done right. If your returns are signed by a TurboTax tax expert, it will be backed by TurboTax’s 100% Accuracy Guarantee. If your taxes are not filed correctly TurboTax pays any IRS penalties.
Time is money
As a busy parent, I never seem to have time for anything as I juggle being self-employed, parenting teens and traveling. Making an appointment to get my taxes done can be really hard to fit into my agenda. With TurboTax I can file right from my mobile device or computer anytime, anywhere. And when you file with TurboTax imputing your information is so easy! By using W-2 snap & auto-fill all you have to do is snap a photo of your W-2 with your phone or tablet, verify your data and watch as your information is securely put into all the right tax forms for you. Additionally, TurboTax securely imports tax information directly from more than 1.5 million employers and financial institutions, eliminating data entry and increasing accuracy. And TurboTax coaches you step-by-step to help get your taxes done right. Just answer simple questions about your life, like “Do you have kids?”, “Did you buy a house?” and TurboTax will find every tax credit and deduction you qualify for so you can be confident you are getting every dollar you deserve.
Put your refund money to work for you
If you do get a big fat refund check having a smart plan for that money will not only save you money but maybe even make you money! So instead of spending all of your tax refund on a fun vacation (I know I am tempted to) multiply that refund money by investing it or paying off credit card debt. Some great investment ideas for parents include investing in your child’s college, investing in your retirement plan or creating an emergency fund. It’s also a great idea to set a small percentage of that refund money aside for something you enjoy like planning a fun activity for your family, getting new clothes. Investing in something that brings you joy will motivate to continue saving and investing because you’re also enjoying the money you make!
File with confidence and get all of your tax questions answered when you file with TurboTax Live.
Disclosure: I am not a tax expert and you should consult with a CPA if you have any questions.