2015 may be another good year for tax credits for families. Most of the child- and education-related tax breaks on the table the last several years are available once again to parents — or in some cases to grandparents or to students themselves. Make sure that you and your family are taking advantage of the credits, deductions, and other tax-saving opportunities that apply to you. Savvy, strategic tax-related decision-making can become a family tradition, if it’s not already.
Tax Credits
Tax credits reduce your tax bill dollar-for-dollar. (See the Chart Tax deductions vs. credits: What’s the difference?) So make sure you’re taking every credit you’re entitled to. The American Taxpayer Relief Act (ATRA) made the benefits of the following credits permanent:
- For each child under age 17 at the end of the year, you may be able to claim a $1,000 credit. Warning: The credit phases out for higher-income taxpayers.
- For children under age 13 (or other qualifying dependents), you may be eligible for a credit for a portion of your dependent care expenses. Eligible expenses are limited to $3,000 for one dependent, $6,000 for two or more. Income-based limits reduce the credit but don’t phase it out altogether.
- If you adopt, you may be able to take a credit or use an employer adoption assistance program income exclusion; both are limited to $13,400 for 2015 (up from $13,190 for 2014). An income-based phaseout also applies.
For more information on the income-based phaseouts that apply to these credits, see the chart below.
Education Credits
If you have children in college or are currently in school yourself, you may be eligible for a credit:
American Opportunity credit. This tax break covers 100 percent of the first $2,000 of tuition and related expenses and 25 percent of the next $2,000 of expenses. The maximum credit, per student, is $2,500 per year for the first four years of post-secondary education. The credit is scheduled to be available through 2017.
Lifetime Learning credit. If you’re paying post-secondary education expenses beyond the first four years, check whether you’re eligible for the Lifetime Learning credit (up to $2,000 per tax return).
Be aware that income-based phaseouts apply to these credits.
For more information, contact GTM’s Household Employment Experts at (888) 432-7972.