Your kids are getting older. Before you know it they'll be dating, driving and entering college (if they aren't already!). Tax breaks drop dramatically as your children grow up, but you may be able to offset the losses with some timely tax planning. Consider the following tax events based on the age of your child:
Tax move: Now that your child is a teenager, hire him or her to work at your business. Typically, the child will owe little or no income tax on the wages, and might even be able to claim an exemption from withholding.
Tax move: Claim a nonrefundable $500 credit for a dependent who isn't a qualifying child for the CTC. Typically, this is available to parents of high school seniors and college students.
Tax move: If your child is going to college, claim one of the higher education credits for qualified college expenses. For instance, the maximum American Opportunity Tax Credit (AOTC) is $2,500 per student per year, although it is subject to a phaseout. Once they are out of school, call to discuss your situation. We can run through the dependency tests to determine if you can still take the $500 dependent credit.
Give us a call to set-up an appointment to go over your tax situation and to plan ahead.
"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
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145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720
To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!