Are you ready for tax season? While the due date for taxes may still be a month away, you can save yourself the stress and hassle of last minute rush by getting prepared now.
This year you have until Monday, April 18th to file your taxes without an extension. If you are a new parent or have a child heading to college, you have a number of new opportunities for exemptions and credits. Here are some key ones not to miss:
· Dependent Exemption: Your child is likely to be your dependent, and therefore eligible for the dependent exemption, which can reduce your taxable income, lower your tax obligation. For every qualified dependent you claim, you can reduce your 2015 taxable income by $4,000.
· Child TaxCredit: If you meet the requirements, the Child Tax Credit directly lowers your tax bill dollar-for-dollar, up to $1,000 per child.
· Child and Dependent Care Credit: Under the Child and Dependent Care Credit you may receive a credit up to $1,050 of your child care expenses for one child under 13 and up to $2,100 for two or more children under 13. There is no age limit if they are disabled.
· Earned Income Tax Credit: Working parents with modest incomes may qualify for the earned income tax credit, which can reduce your tax bill and may result in a refund if it lowers your tax obligation to zero.
· Adoption Tax Credit: Depending on your income, you can claim a certain dollar amount per adoptive child, which can offset costs of adopting a child.
· Higher Education Tax Credits: If your child is enrolled in college, parents can claim either The American Opportunity Tax Credit (AOTC), or the Lifetime Learning Tax Credit. The AOTC can be used for up to four years, and the Lifetime Learning Credit has no limit as long as your child participates in an eligible degree program.
· Student Loan Interest Deduction: The deductions parents can make on interest payments for student loans can reduce the amount of taxable income, and possibly lower your tax bill.
· Self-Employed Health Insurance: If you’re a self-employed parent, generally you can deduct 100% of the cost of health insurance premiums paid for children under the age of 27.
This year, we are doing our taxes online with TurboTax. Though in the past, we've paid someone to do our taxes, this year we took the plunge and so far, it's been surprisingly easy! TurboTax walks you through step-by-step to help get the deductions and credits you can. You can also save your progress so you don't have to complete everything in one sitting if you're still waiting for bank documents or need to look up eligibility for a tax break. To figure out what edition of TurboTax you need, simply visit their website and click on the buttons that describe you - Do you have children? Own a home? Own a business? TurboTax guides you to the perfect edition.
While few people enjoy doing taxes, you can prevent the stress of tax time rushing by getting started on them now. Visit TurboxTax.com to learn more.
Momtrends was not paid for this post.
We did receive a sample of TurboTax, and are guilty of already spending our return in our mind.