11 Kid-Centric Tax Breaks Every Parent Should Know About
It’s no secret that raising kids is expensive—but did you know that it’s now reached price-of-a-vacation-condo-at-the-beach and splurge-on-a-Bentley expensive proportions? The cost of rearing a middle-class American child from infancy to the age of 18 is now an estimated at $241,000—and that’s before you start getting those college bills.
Fortunately, parents get a little bit of financial relief every April, courtesy of the U.S. government. Your little ones can nab you a number of tax breaks, but unless you’re an accountant yourself, it can be easy to miss out on them.
That’s why we asked Michael Goldfine, a New York City–based certified public accountant, and Jeffrey Schneider, an enrolled tax agent based in Royal Palm Beach, Florida, to highlight the 11 deductions, credits and tax strategies that every parent should know about—whether you have a toddler, or a college senior who’s just about to graduate.
Tax Breaks for Parents With Kids of Any Age
Dependent Exemption As soon as your little bundle arrives, he or she earns you a break on your taxes. For 2013 the dependent exemption reduces your taxable income by $3,900 for each dependent child under the age of 19—or until the age of 24, in the case of a full-time student. For divorced parents, the exemption typically goes to the parent who has custody of the child most of the year.
Child Tax Credit The child tax credit shaves up to $1,000 off your tax bill for every kid under the age of 17. There are a handful of requirements for eligibility, such as the fact that the child must be claimed as your dependent and live with you for at least half of the year. The credit phases out for married couples filing jointly with incomes above $110,000, for a single head of household with an income of $75,000 or for a married person filing separately with an income of $55,000.
Medical Mileage Deduction Toting your kid to all of those doctors appointments could earn you a tax break. Parents can often deduct travel expenses associated with medical visits, but there are restrictions. “The mileage used when you take your child for their normal doctor checkup is not deductible,” Schneider says. “But if [the trip is because] they are sick, it is.” You can deduct the cost of gas, parking and tolls related to the visits using the 2013 standard medical mileage rate of 24 cents per mile.
Tax Breaks for Parents With Infants and Kids in Elementary School
Child and Dependent Care Credit If you paid for child care last year while working or looking for work, you may be eligible for a credit of anywhere from 20% to 35% of your child care costs, with a cap of $3,000 per child and $6,000 for more than one child. While the credit is most applicable to those with young children, care for any child under the age of 13 may be eligible, says Schneider. The credit can also be applied to after-school care, as well as day camps during school vacations.
An often-overlooked requirement, however, is that both parents must be working. “A lot of people don’t realize that if only one parent is working, they won’t get the full credit,” Goldfine says. There are two exceptions to that rule: if the nonworking spouse is either looking for a job or is in school full-time.
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