Tax day (April 17) is just around the corner. I have to admit I look at filing my taxes a whole lot differently this year than previous years for obvious reasons. When I started thinking about filing my returns, I started to dig deep into the IRS’ website to learn the rules and regulations when it comes to filling taxes as a parent.
We all know about the child tax credit where you can claim as much as $1,000 per qualifying child. You can claim child tax credit in addition to the credit for child and dependent care expenses. Here are five tips parents should consider, if you have not thought about it, before filing your taxes this year.
- Child and Dependent Care Information – according to the IRS, if you paid someone to care for your kids (or a dependent) so you and your spouse can work; you may be able to reduce your federal income tax by claiming the Credit for Child and Dependent Care expenses on your tax return. This Credit is available to people who, in order to work or to look for work, have to pay for childcare services for dependents under age 13. Read the IRS’ Ten Things to Know About the Child and Dependent Care Credit; download the form; and for more info, visit http://www.irs.gov/individuals/article/0,,id=121435,00.html.
- Education Credits—the cost of education nowadays is not cheap. Any help parents can get goes a long way, so take advantage of the education credits on your taxes this year. For most parents, each eligible student will qualify for the maximum annual credit of $2,500 per student—that’s $2,500! The American Opportunity (Hope Credit extended) and the Lifetime Learning Credit are education credits you can subtract in full from the federal income tax, not just deduct from taxable income. See the IRS’ list of Five Ways to Offset Education Costs.
- Earned Income Tax Credit (EITC)—the IRS has made it easier to find out if parents qualify for EITC than previous years. By answering a few questions about yourself and income, you can find out if you qualify or not. As long as you have your child’s valid social security number (you need this to claim the credit) and you know your status, you can easily use the EITC assistant to find out if you qualify. Earned income includes all the taxable income and wages you get from working. There are two ways to get earned income: you work for someone who pays you, or you work in a business you own or run. Read more on the earned income tax credit.
Examples of Income that is Not Earned Income:
- Pay received for work while an inmate in a penal institution
- Interest and dividends
- Retirement Income
- Social security
- Unemployment benefits,
- Child support
4. Due date of return—file Form 1040EZ by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia. If you were serving in, or in support of, the U.S. Armed Forces in a designated combat zone or a contingency operation, you can file later.
5. Expired tax benefit—the making work pay credit has expired. You cannot claim it on your 2011 return.
Source: Internal Revenue Service (IRS)