The family is the most precious gift we can receive. It’s what gives our life purpose and the kind of love that we never thought possible until the moment we first look into our children’s eyes. While there are innumerable emotional, psychological and spiritual benefits to having a loving family to share your life with, there are numerous tax benefits as well. In an uncertain economy, many families are finding it harder than ever to get by, so it’s vitally important to seize whatever help that you can to ensure that your children grow up with every advantage that you can afford them.
We all pay our taxes because it’s our civic duty and because we know that they’re vital in funding the local, state and federal services which we take for granted. Yet few of us realize that we’re able to get something back from what we put in. After all, taxes are designed by governments to support and improve the lives of the governed and every now and then hard working families need to lean on that support network. As important as taxes are, nobody should be paying over the odds and it’s important to know you’re paying the right amount to help you save for your family’s future.
In this post we’re going to look at some tax benefits that you may be able to claim that you weren’t even aware of. But first…
Don’t be afraid to invest in help
Doing your own taxes can be an incredibly long and laborious process that can tax (no pun intended) even the sharpest minds. If the thought of extensive paperwork gives you hot flushes then there’s no shame in reaching out for professional help. You’d be astonished at how much an incredible tax attorney can save your financial well-being, and if you do need to invest in help with your taxes, be assured that a good lawyer can usually save you more than they cost.
Knowing who you can claim for
Most tax benefits pertain to you, your partner or your dependents. A dependent can be your children, stepchildren, foster children, siblings or step-siblings, or descendants of any of these, such as grandchildren. To qualify as a dependent, the child must live with you for more than half of the year and be under 19 years of age at the end of the year, or under the age of 24 and a full-time student.
As well as dependents, you may be able to claim for any of the following so long as they have lived with you for a year or more as a regular household member.
- Parents, grandparents, and other direct ancestors
- Aunts and uncles
- Nieces and nephews
Whether your dependent is a child or an elderly relative, so long as they have no income and you provide more than half of their care, they still represent a dependent exemption. A family is entitled to a $4050 exemption per dependent, per year as well as a personal allowance of $4050 for you and your partner. Fortunately, there is no longer a gross income test for a qualifying child. That means you can claim an exemption even if they have their own income (say, through a part-time job) as long as the child doesn’t provide over half of their own support.
Just remember that the same dependent cannot be claimed by more than one taxpayer.
Medical expenses can also be tax deductible within limits. A medical expense is defined as any expense paid for the prevention, diagnosis or medical treatment of any physical or mental illness. This includes any amount paid to treat or modify any part or function of the body for health purposes. Unsurprisingly, this does not include cosmetic or elective surgeries that are non-health related. So, dental surgery to correct the function of your teeth is deductible, but cosmetic whitening procedures are not.
The cost of transportation to the locations where treatment is received is also tax deductible as are, your health insurance premiums, and your costs for prescription drugs.
However, for medical expenses to be deductible they must be itemized, and then you can only claim for them if the costs that exceed 10 percent of your Adjusted Gross Income.
Finally, your dependents’ for college tuition expenses, are also deductible to parents, regardless of whether or not you itemize your deductions. The maximum annual deduction is $4,000. This maximum deduction drops to $2,000 and then disappears completely as income rises. Expenses eligible for this deduction are limited to higher education tuition and mandatory enrollment fees and not associated living costs. These expenses are also eligible for the American Opportunity tax credit.