Tax Tips from the Experts
PARSIPPANY, N.J. - Jackson Hewitt Tax Service, an industry leader providing full service individual federal and state income tax preparation, continues its weekly series, "Jackson Hewitt Tax Time Tips." This week's tips highlight several tax issues worth considering by parents. This Week's Tip: Whether six months or sixteen years old, a child can bring a range of credits and deductions for parents to consider before having their income tax return prepared and filed.
- There are several tax deductions available to parents who welcomed a child, including: pre-natal doctor visits for the mother, labor and delivery room costs and even mileage to the hospital And many costs incurred after a child's birth are also deductible, including: hospital nursery fees, well-baby check-ups and immunizations.
- Parents who adopted a child last year are also eligible to take advantage of credits and deductions. For example, a tax credit of $13,400 is available for families who adopted a child. The adoption credit is allowed for qualified expenses such as: adoption fees to the organization or group sponsoring the adoption, court costs, attorney fees, domestic and international travel costs (including meals and lodging while away from home) and other costs related to adopting a foreign child or one from your own country.
- "Another great benefit for parents or guardians is the Child Tax Credit," said Mark Steber, Vice President, Tax Resources for Jackson Hewitt Tax Service. "Taxpayers with qualifying children may be able to claim a tax return credit of up to $1,000 for each child under the age of 17. This is a great benefit that can help reduce tax liability."
- The Child and Dependent Care Credit is a nonrefundable credit (up to $3,000 for multiple dependents) for taxpayers who paid child care expenses for a dependent child under age 13, for a disabled spouse, or for another qualified dependent.
- For parents with children in or recently out of school, there are also tax considerations relating to their education:
- "Two credits that help supplement the cost of education are the Hope and Lifetime Learning Education Credits," comments Steber. "The Hope Credit offers filers up to $1,650 for each eligible student for a period of two tax years.
- A Lifetime Learning Credit of up to $2,000 covers any courses students take (such as courses to acquire or improve job skills) beyond the first two semesters, or courses taken in the first two years when you do not qualify for the Hope credit.
- Both of these can be valuable when trying to manage school-related expenses."
- Finally, don't forget that student loan interest is deductible, up to $2,500.