Ways that kids can save you money on your taxes
Families that hire someone to care for their children are understandably focused on finding the perfect person. So when the time comes to address payroll and employer taxes, it's easy to become overwhelmed. But the truth is that a little work up front is worth it because most families will qualify for the Tax Credit for Child or Dependent Care, which can offset a significant portion of their household employer payroll taxes.When Teens Owe Money to Uncle Sam
A summer job is a classic rite of passage for teenagers. But teen jobs can be a source of aggravation for young workers and their parents who aren't prepared to deal with the potential taxes. When it comes to income, the IRS generally wants its cut regardless of the earner's age. But some special tax rules apply to young workers, based not only on age, but also on amount of money earned and even the type of job.
The Tax Joys of Parenthood
A growing family makes you eligible for a variety of tax savings. You get an additional tax exemption, may be eligible for several tax credits, and can use tax-favored ways to save and pay for Junior's college. You might even be able to lower your taxes by shifting some of your higher-taxed income to your youngster, either as an asset gift or as salary if you own your own business. Here are some common tax matters every new and experienced mom and dad need to consider.Kiddie Tax Rules for Child's Income
Because of changes to the kiddie tax, the name of the rules governing the tax rates applied to younger investors' incomes probably should be changed. The age at which a child's usually lower rates kick in now is much higher, meaning the tax bills on such accounts are also higher. Changes in young investors' income may mean higher taxes, and may also cost parents.IRS Can Help You Look After the Kids
Most working parents are well aware they get a tax break to help cover the costs of sending Jimmy or Janie to day care. But some parents overlook the tax advantage of summer day camp costs. During school vacations, many parents turn to these supervised programs to provide child care while they work. Overnight camps don't count, but the Internal Revenue Service says day camp expenses do qualify for this popular credit.Ensure Your Children are a Tax Credit to You
All parents hope that their children will be a credit to them. That can literally be the case at tax time. The popular child tax credit will remain at the $1,000-per-child level through 2012. That's great news for parents, who find the credit is an easy way to reduce their tax bills dollar-for-dollar.Uncle Sam Can Help Pay Some Adoption Costs
Raising kids is expensive. And if you're trying to adopt, it can cost you even more. But there is tax help available. Parents can claim a tax credit that covers some adoption expenses.
Uncle Sam Helps Out with Children's Day Care
Married and unmarried parents who work can qualify for a child care credit to help with the costs of providing child care. Certain cafeteria plans allow participants to contribute to a flexible spending account that can be used for child care expenses. Expenses paid with FSA money cannot be claimed for the child care credit. Also, the maximum expenses eligible for the child care credit are reduced by the FSA paid expenses.Uncle Sam Can Help with Child Care Costs
If you send your kids to day care so you can work, check out the child care tax credit.Can I Claim 24-year-old Son as Dependent?
"My son turned 24 last year. Since he is a full-time college student, can I claim him as a dependent? He had income from a part-time job, but I was his main source of income. Is he a qualifying child? Or at least a qualifying relative?"Grandpa Asks: Who Pays Grandkids' Dividend Taxes?
It used to be easy to transfer assets to your grandkids and shift the tax burden to them, too. Over the years, the benefit of income shifting has diminished. However, it is still a great way to establish savings for your grandchildren and also get appreciating assets out of your estate. Here is what needs to happen with minor children.Is 19-Year-Old Still a Dependent?
"I have a son who is 19 and has lived with me for nine months of the year and is not a student. I have provided more than half of his support. He was employed for two months over the summer, making less than $2,600 for the year. Can I still claim him as a dependent? If so, do I put his income down under mine or does it even need to be claimed, or does he have to file a tax return?"Who Pays Tax on Kids' Disability Benefits?
If your children are receiving a parent's disability benefits, here is how to determine if they have to file taxes.
More Money Tips & Tools
- 10 places to look for $500 in savings
- 9 savvy strategies to save for a rainy-day fund
- 5 big bills you can cut fast
- Money-saving secrets of the rich and frugal
- Don't get married without doing this paperwork
- The emotions behind buying stuff
- Are you responsible for your parents' debts after death?
- This week's Readers' Tips