3 Tax Tips All Parents Should Know
Few people look forward to digging into their taxes—unless, of course, they get money back from the government. As you get married and have children, and as various other life events happen, accounting for all that change on your taxes can seem daunting. To help parents specifically make sense of things, we’ve compiled several tax tips all parents should know regardless of their situation.
Understand Your Tax Status
First, while many married couples with kids submit their taxes as Married Filing Jointly, a parent could fall into one of several other categories.
Head of Household
Unmarried parents with a qualifying child (or dependent) should file as Head of Household, which affords a standard deduction of $18,350. This classification covers foster parents, grandparents with guardianship of grandchildren, stepparents, and other nonmarried guardians.
Qualifying Widow or Widower
Head of Household covers many people, but you shouldn’t file this way if are a widow or widower. People who have suffered the loss of a spouse can file as Married Filing Jointly in the year of their death and as a Qualifying Widow or Widower for the next two years as long as they claim a dependent. Filing this way affords the same deduction as Married Filing Jointly: $24,800.
Deduct Charitable Donations Properly
Think about your past year’s charitable donations and their effects on tax deductions. If you’ve kept track of your donations with receipts, you can choose to itemize your deductions. This is smart when you suspect the value of the donated items (which you can assess with a donation value guide) exceeds the value of your standard deduction.
Know Your Tax Credit Options
Another tax tip parents should follow pertains to tax credits. It’s important to know which credits you qualify for and to claim them.
Adoption Tax Credit
If you’re adopting a child, you can claim as much as $14,300 with the Adoption Tax Credit to cover any adoption-related expenses necessary to complete the process. People adopting children with special needs will receive the credit in full, regardless of their own expenses or lack thereof.
Child & Earned Income Tax Credits
Other potentially available credits include the Child Tax Credit and the Earned Income Tax Credit. Under the 2017 federal tax law, the Child Tax Credit provides $2,000 to parents with a child aged 17 or younger, while parents with qualifying dependents above 17 can claim $500. Meanwhile, parents who earned a low to moderate salary may be able to file for an Earned Income Tax Credit, which can earn them more if they have more kids. Parents of three or more children can max out at an approximate $6,500 credit.