Our tax laws are so complicated, it’s no wonder that there’s so much bad tax advice out there. Go to your local bookstore or public library and look at the shelves filled with books on taxes. So a friend of a friend gets reads one of these books and thinks he’s an expert on the subject! So he tells your neighbor about something he read, and by the time this “tax tidbit” gets to you, who knows whether it’s right or wrong.
The end result . . . MANY TAXPAYERS, INCLUDING SMALL BUSINESS OWNERS, END UP MAKING CRITICAL, COSTLY MISTAKES WHEN IT COMES TO TAXES.
Ask any new parent, and they will tell you that the costs associated with a new baby are many, everything from bottles to diapers to cribs, strollers, and high chairs, and all of this before the child even learns to walk and talk and beg you for a pair of $500 designer jeans. Parenting is one of the most rewarding, and important jobs that a person can have, in addition to being one of the most expensive. The good news is that there are two tax breaks offered by the federal government that the majority of parents can qualify for, which are the dependent exemption and the child tax credit.
The dependent exemption is a tax break that allows you to receive an additional tax deduction of as much as $3,000 each year until your child turns 19. This is addition to the standard tax exemption that the IRS allows per person to cover basic living expenses. Single people are allowed one exemption, while married couples have the option of taking two of these exemptions per year.
The amount that you will save with this exemption depends on your current tax bracket, and generally, the higher the tax bracket, the more money you will receive, unless your income is too high to claim an exemption, but again, most people will qualify. This dependent exemption is only phased out for married couples filing jointly with an adjusted gross income of more than $300,000. Limits for single parents exist as well, and it is important to research these limits, both for married and single parents, to be sure that your income does not exceed them. If you qualify for this exemption, you can simply fill out the required lines on your tax form, including an adoption taxpayer identification or social security number for each child.
The child tax credit is available for married couples filing jointly with a reported gross income of below $13,000, although again, it should be noted that income limits for both single and married parents are revised frequently. With this credit, it is possible to receive up to $1,000 per child.
Determining the amount of credit that an individual can claim requires the completion of the child tax credit worksheet, which can be downloaded from the IRS website. You will need to provide a social security or adoption taxpayer identification number for each child in order to qualify. As with all tax information you should always check with a professional because tax laws can change every year.
THE 9 BIGGEST MISTAKES TAXPAYERS MAKE will help you to avoid these mistakes that are probably costing you money every year! (Look for it at the middle of the page – it´s a free bonus) >>>
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Wayne, I thought this stuff would be tricky, hard to follow, or simply something I couldn’t find the time to do. Boy, was I ever wrong! Not only do you explain it in easy to understand terms, but you can make it so darned easy to save big time on my taxes. Thanks to your help, I saved $4,600 and I’m going to be able to take a really nice family vacation this year — all because of your materials, all from the money I normally would have paid on taxes. Thanks for helping me safe on taxes!”