Nobody likes paying taxes,
but tax time can get a lot less stressful once you add a couple kids to the
mix. When you have a child, so many beautiful things are added to your life.
Not the least of which is a larger tax refund.
Hey, the government understands
that raising kids can get pretty expensive, and for all the things that they
may get wrong, at least they get this one right. Here are a few tax breaks that
you need to be aware of as you file this year. If you don't pay attention, you
could lose out on thousands of dollars in tax deductions and credits.
If your child is in day care or you
hire a babysitter so you can work or look for work, then the money that you
spend probably qualifies you for the Child and Dependent Care Credit. No,
you can't hire your spouse or an (under 19) older child of yours, but anyone
else is fair game. See the IRS page on the Child
and Dependent Care Credit.
Anything you spend on breast pumps
and lactation supplies is considered a medical expense and is deductible. The
amount you can deduct depends on your income, but when you consider the money
that you've spent on nursing pads, special nursing shirts, your breast pump,
bottles, breast milk storage and even your rocking chair, it might add up to a
pretty penny. The IRS website says "you can include in medical expenses the
cost of breast pumps and supplies that assist lactation," which is super vague.
Talk to your tax professional if you are not sure whether an item would fall
into this category.
529 plans, also known as qualified tuition plans, are tax shelters that allow
you to save and spend toward higher education expenses while simultaneously
sheltering that money from federal taxes and often state taxes as well. Your
contributions to the plan are not tax-deductible, however interest will not be
taxed and neither will the beneficiary be taxed upon withdrawal of those funds.
Check out the IRS questions and
answers page for more information.
The child tax credit may allow you to lower your federal income tax by $1000
for each child. The child must be claimed as a dependent on your tax return, they
must have lived with you for over half of the year, and this credit can extend
to biological children, stepchildren, grandchildren, adopted children, and in
some cases even nieces and nephews. Basically, if there is a little one depending
on you for survival more than half of the time, you will probably qualify for