If you are a new parent, you are likely unfamiliar with the tax exemptions and tips that come with having a child, and since you now have another member of your family, it is likely that you definitely need to find new ways to save money on taxes. Exemptions like the two below can be especially helpful if you are already in trouble with the IRS and need tax resolution fast. Here are several key exemptions that many parents aren’t initially aware of:
- Dependent Exemption: You are eligible to take this exemption to cover your basic living expenses, and you can take it once for every dependent. This means single people take one, since they are dependent on themselves, married couples can take two, one for each person, and parents can also take one for each child. While it isn’t much, it definitely helps. In 2012 it was $3,800 per person, and it went up to $3,900 in 2013, and the amount is higher in higher tax brackets. Parents can take this deduction once each year until their child turns 19. Consult a tax attorney for help calculating how much you will save and how to file for this exemption.
- Child Tax Credit: If your income as a married couple is below $110,000, is lower than $55,000 for a married person filing separately, or is below $75,000 for a single parent, you are eligible to file for a child tax credit. Since this is a credit, not a deduction, the entire amount of $1,000 per child goes right back into your wallet. The IRS Publication 972 contains a Child Tax Credit worksheet that can help you determine how much money you are eligible to save, but we encourage you to contact us for tax help if you are still uncertain.