Toddler Tax Deductions Every Parent Should Take

tax write offs for kids
I'm Totally Tax Deductible
It's tax time, people! That means lots of scurrying around, trying to find receipts, W2s, interest statements, and all of those slips of paper you collected from Goodwill when you dropped off your donations. While the big stuff like mortgage payments and health care costs may pop into your mind immediately when you're looking for a tax write-off, don't forget the kids!

In addition to simply having them, there are some great benefits to spending money on those little tykes. Having just visited my accountant yesterday, I'm fresh off the "You mean I can write that off?" train. And there are actually differences between what you can claim if you have a toddler versus an older child. Believe it!

Here's how you can write your toddler expenses off on your tax return.*

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  • The first and most widely known exemption is the basic tax deductible exemption you get for having those dependents. For 2012, each exemption equates to a $3,800 deduction. A married couple also has one exemption each, so you would have a total of four if you were a married couple with two children.
  • If you have a certain income, you can also qualify for a child tax credit of $1,000 for each child living with you under the age of 17.
  • The child and dependent care credit is a fantastic way to offset your child care costs if you're a two-income family, or even a one-income family with a student or job searcher in the house. For parents making $43,000 or less, the IRS allows a credit of 20% to 35% on expenses up to $3,000 in child care for one kid and $6,000 for two or more kids. If you make more than that, the credit does shrink, but you still can claim $600 for one child and $1,200 for two or more children.
  • Don't forget your medical expenses with your toddler. It's worth it to even tally up your co-pays if you have insurance, and any other non-reimbursable expenses. Especially if you've got a toddler that has allergy shots or any type of EI. We were shocked this year at how much out-of-pocket medical costs we had. It's worth it to keep those records.
  • If you adopted your child, the IRS allows new parents an adoption credit worth up to $12,650. You can take the full credit even if your expenses are less than the value of the credit, if you adopted a special-needs child.

Have you done your taxes yet?

 

*I am not an accountant, nor do I play one on TV. Always talk to your accountant before filing your return.

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