Do you know that many parents make mistakes while filing their tax returns? Are you aware of all the tax credits which you are eligible to claim as a parent? Go through this article and acquire knowledge regarding what to include when you are filing your tax return. The knowledge will help you avoid some common mistakes which parents often make while filing taxes.
1. Claim student loan interest on taxes - Do you know that you can claim your child's college student loan interest on your own tax return? Yes, you can do that if your child is still a dependent. You're eligible to claim this tax refund even if your child is paying the interest on his/her student loan.
2. File for adoption tax credit - Adopting a child involves a lot of expenses associated with raising a child such as, doctor visits, clothing along with the cost of adoption. So, filing for the adoption tax credit may help you lessen the expenses of adopting a child. However, make sure you keep all the receipts and documents carefully since the overall process of adoption may take more than 1 year of time. You must also know that you need to file the tax credit for the year you've legally adopted the child.
3. Claim head of household status if single - If you are a single parent, then you can claim the head of household status in order to get certain tax advantages. You can get tax advantage if you've to pay more than half of the cost of your household expenses and your children live with you for more than 6 months in a year.
4. Invest in tax-advantaged savings plans - Children grow up fast so, you need to save for their education. Have you heard of college savings accounts which allow you to invest your after-tax money? By investing in such an account, the amount will grow tax-free and you can use it to pay for your child's education. Moreover, there are also some employers who allow you to invest your pre-tax money into flexible spending accounts which you can use to pay for the cost associated with childcare.
5. Mention the SSN accurately - If you've recently got married and applied for a new SSN since you've changed your name, then ensure that you're providing the right SSN while filing your tax return. It is also advisable that you apply for the Social Security Number (SSN) of your child as soon as he/she is born and mention it in the tax return.
Apart from above, the working parents are also eligible to get the child and dependent tax credit. You, being a parent, can get tax return on the amount you've spent on babysitters, daycare along with summer camp and after-school programs of your child if he/she is less than 13 years if age. However, you should be careful to keep the records of the social security numbers of the care providers so that you provide them accurately while filing your tax return. This will help you qualify for the exact amount of tax credit that you are eligible for. You can utilize this amount to manage your finances in a better way.