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New Parents: How to Save on Your Denver Taxes
Becoming a new parent can be expensive, so make sure to stay on top of things and keep these deductions and credits in mind when it comes to your taxes:
Dependent Exemption: This is probably the most beneficial tax exemption if you have children. Basically, the reduction lowers your taxable income. Each year it changes, but for the new tax year, it is $4,000 per child. That’s $50 more than 2014.
Child and Dependent Care Credit: If you’re going to pay for child care for your dependents because you’re going back to work or school, you can use this credit to claim up to 35% of expenses of $3,000 for one qualifying dependent.
Child Tax Credit: You may be eligible for this credit which reduces your taxes dollar for dollar. It’s an additional $1,000 you may be able to claim for children under 17.
Medical expenses: If your medical expenses are more than 10% of your adjusted gross income, you may be able to deduct them. Make sure to keep receipts for even a routine check-up.
Open a 529 to manage your college fund: A 529 is a Qualified Tuition Program that is a tax-advantaged savings plan where distributions for college expense are not taxable if they are less than or equal to qualified education expenses.
When expecting a little one, it’s a good idea to get a head start understanding what you can and can’t deduct as well as what credits you qualify for. As always, Bloch, Rothman, & Associates, your Denver Tax Service is here to advise you on this exciting time in your life!