Everyone knows that raising kids can be expensive. But when it comes to taxes, your precious tikes might actually save you money. An article in the April issue of Family Circle magazine highlighted some not-so-well-known deductions that families can use for significant savings.
Check out some of these before filing your returns. And remember, the deadline for 2012 is April 17.
1. Claim your kids: Most families already take advantage of the exemption for dependents, which allows you to deduct $3,700 for each child. But depending on your modified adjusted gross income, some families may also be eligible for an addition $1,000 per child under the age of 17. Working moms and dads should definitely take advantage of the child and dependent care credit. Working parents, as well as anyone who is disabled, in school full-time or looking for a job, can deduct 20 to 35 percent of the costs of childcare. The maximum amount is $3,000 for one child and $6,000 for two.
2. Claim their education: If you have children in college–or if you’re saving for children to attend college–you may be eligible to write off up to $5,000 for those filing singly or $10,000 when married filing jointly. Currently, 34 states allow you to deduct a portion of your contributions to a qualified college savings plans called a 529.
3. Claim your charitable giving: Don’t gripe about all the PTA solicitations for cash. Instead, write them off! I didn’t know it until I read this article, but writing a check to the PTA counts as charitable giving as long as the PTA is registered as a non-profit. The next time you clean out your closets and drop a load off at your local Salvation Army, be sure to assign a value to every item. It’s all deductible.
4. Claim any special needs: Parents raising children with special needs get a break–Uncle Sam allows the medical-expense deduction. If you spend more than 7.5 percent of your adjusted gross income on school or therapy for a child with special needs, you may qualify.