According to the U.S. Department of Agriculture, the average cost of raising a child for 18 years is more than $241,000, and this does not even include college. This number can be terrifying for new parents, but you will receive some financial assistance via tax breaks as long as you fill out all of the applicable paperwork correctly. Fortunately, taking advantage of things such as the Child Tax Credit is relatively simple, and this will help you free up some money so that you can purchase everything that your newborn or young child needs.
In fact, taking the time to carefully file your taxes could even allow you to put some money aside each year so that it will be easier for your child to attend college. There many important facts that every parent should understand about the impact that children can have when filing their taxes.
1. Your Infant’s Birth Date is Important
If your baby was born by 11:59 p.m. on December 31, you will be able to claim them as a dependent for the entire 2013 tax year. However, even if they were born after the New Year, you are still eligible to claim your medical expenses to receive a tax deduction. Each child that qualifies as a dependent based on their birth date will provide you with a $3,900 dependent exemption. In other words, if you have two children, you will enjoy an exemption of $7,800.
2. The Child Tax Credit is Based on Income
You could be eligible for a $1,000 credit for each dependent child if your income is in the right range. For the 2013 tax year, this will be $75,000 for an individual, $110,000 for a married couple that files jointly and $55,000 if you are married but choose to file separately. This credit can help reduce many parents’ taxes to zero or increase their refund amount, so you will definitely want take advantage of this if you are eligible.
3. Outstanding Taxes Can Impact Your Refund
New parents definitely need to maximize their refund so that they can pay for daycare and buy helpful items such as a baby bouncer and playard. Unfortunately, if you are currently behind on your taxes, your entire refund could go toward settling this debt. Therefore, if you are dealing with the situation, it is important to contact a professional tax company to receive tax relief assistance through qualifying programs. These programs can reduce the amount that you owe, and they can also help you make more manageable monthly payments.
4. Always Look into Additional Tax Breaks
Your lifestyle and income could qualify you for additional tax credits, including the Credit for Child and Dependent Care Expenses, the Earned Income Tax Credit and the Additional Child Tax Credit. Keep in mind that the IRS very rarely makes adjustments in a tax payer’s favor, so it will be up to you to make sure that you utilize each tax credit that you qualify for.
Other Tips for New Parents
If your employer offers a Flex Spending Account or a Dependent Care Benefit program, you should definitely consider signing up. These tax-free accounts allow you to put money aside for expenses such as medical bills and daycare, and this can make it much easier for you to stay on top of everything. Additionally, anyone who is cash-strapped after the birth of the new child should consider reducing their expenses by shopping at secondhand stores as much as possible.
As you can see, there are many ways that a child of any age can help you receive a larger tax refund, and maximizing all of these opportunities will definitely make it easier for you to provide them with everything that they need to have a higher quality of life. Therefore, if you have any current tax issues or questions regarding your refund, you should reach out to a professional tax company to help you resolve everything properly.
As a mother of 4 and business owner, Lisa Coleman understands what every tax break can mean when filing taxes, especially if money is owed in the end. She recently viewed online how obtaining tax relief assistance with a professional company can help make a big difference when money is owed.
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