Can I Still Get a Child Tax Credit if My Spouse and I File Separately

Child Tax Credit Married File Joint

Tax Credit

Anyone who has ever filed taxes before with their spouse knows that the best way to save money is to file jointly. Filing jointly allows you to claim more credits and most importantly it takes into consideration both you and your spouse’s income. While it is often suggested that couples should file jointly there are some situations in which couples choose to file separately.

Filing separately if you have children could be a bad thing if you’re hoping to rely on the tax credit you get for having children. If you and your spouse decide to file a joint tax return, a child can only be a dependent by being claimed by one parent. This is also only possible if the child doesn’t provide half of their own financial support and reside with you for more than half the year.  This only applies to children under the age of 19, or under the age of 24 if attending school full time.

Tax experts continue to stress the importance of just how much you lose any time you choose to file separately from your spouse. While losing the child tax credit may be the biggest thing you lose when you file separately, especially when you have children, you also lose other credits that may impact just how much refund you receive at the end of each and every year.

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School’s Back in Session: Taxes and Adult Education

College Degree Education Tax Expenses

Educational Expenses

Thinking about heading back to school, but worried about the cost of education? As an adult, you might be able to claim the Lifetime Learning Credit equal to 20% of qualified education expenses–up to $10,000. You can also deduct your educational expenses as a job or career expense. Here are a few things you should know about deducting your educational expenses.

You cannot deduct any courses for which your employer paid

Any classes your employer pays for you cannot claim on your tax return. It’s also worth knowing that your employer is able to pay for up to $5,250 a year for your classes before it counts as part of your income.

You can deduct a lot of expenses

For tax purposes, “education” is a pretty broad term, and therefore it’s not necessarily restricted to college courses. For example, personal development courses, courses to enhance or cultivate professional skills, and even certain activities that do not involve formal instruction may all qualify. There are a couple of criteria, though. For starters, the course maintains or improves skills that are required for your job or your current trade. For example, a seminar that teaches skill sets directly pertinent to your job. Your educational expenses will also satisfy the criteria if the course(s) are required for your job, or to retain your job title or rate of pay.

Expenses cannot qualify you for a new trade

Looking to change careers? Any courses you take to move into a new professional field do NOT qualify for a tax deduction. For example, a marketing professional cannot deduct course costs for a law degree. Note that this deduction is not qualified nor disqualified by your intent: so long as the expenses qualify you for a new career, they are automatically disqualified whether or not you intend to change careers.

Thinking about an MBA? Be cautious about a deduction

Although the qualifications for the deduction are largely objective, there are a few subjective elements for each scenario. That being said, MBA candidates had mixed results when trying to claim an educational deduction for an MBA program–many such cases ended in court. So long as you garner evidence that your new degree is not in pursuit of a new career, you might be able to claim the deduction.

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Tax Benefits for Parents with Young Children

Raising children is a lot of work, and it can be quite expensive. Fortunately, the government knows this, and accordingly offers a few tax exemptions for parents with young children. It’s important to note that for many of these exemptions, both parents must be working, or the nonworking spouse must be a full-time student or actively looking for work.

Tax Benefits Parents Child Credit

Tax Benefits for Parents

The tax benefits available are as follows:

  1. Child Tax Credit: you can save up to $1,000 off your taxes for every child under the age of 17. It’s worth noting that the child must be claimed as a dependent and must live with you for at least half of the year. Joint-filing couples with incomes above $110,000 or single head of household filers who make over $75,000 are not eligible to claim this credit.
  1. Child Care Credit: If you were working or looking for work while paying for child care, you may be able to claim a credit between 20-35% of your child care costs. This credit caps at $3,000 per child, or $6,000 for more than a single child. Any child under the age of 13 is eligible.
  1. Medical Mileage Deduction: children are prone to injury and illness, and trips to the doctor can take up a lot of time. Fortunately all those trips may qualify you for a tax break. As a parent you may be able to deduct mileage, tolls, parking, and other costs associated with taking your child to the doctor. However only illness or emergency trips are deductible; not trips for a regular checkup.
  1. Dependent Exemption: the dependent exemption reduces your taxable income by $3,900 per child under the age of 19. This exemption can be extended up to the age 24 for full-time students.

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What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) was signed on December 18, 2015 by President Obama. This relatively new federal tax credit is designed to provide jobs for minorities by offering employers an incentive for hiring minority candidates.taxscrabbleletters

The WOTC promotes a more diversified work environment by targeting people who have barriers to finding employment. It’s also intended to help with moving the economy from a dependent state to a self-sufficient state by helping workers with long-term unemployment find steady income and become an economic participant and contributing taxpayer.

On average, varying where workers fall in the target groups, employers can receive a credit of $1,200 to upward of $10,000 per employee hired. This program extends for a five-year period, ranging from December 31, 2014 to December 31, 2019, giving the new-age generation a time to get into a job placement without much hassle.

Overall, WOTC is an effective tax credit to help motivate employers to diversify their hiring processes and allow for equal employment opportunity in America.

Businesses looking to receive these tax credits have to follow certain guidelines. Hiring a professional to help out with getting these tax credits approved may be necessary for faster expedition of each credit. Be a part of the change and see which target groups are involved with the new WOTC program.

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Three Tactics Happy People Use during Tax Season

Happy people tend to do their taxes a little differently. Unhappy people tend to quickly get through their returns without checking for additional ways to reduce their tax bills. Unhappy people are also often those that wait until the last minute to file or request extensions. As we’ll explain in this article, happy people are those who tend to file early, stay organized and search diligently for all possible deductions and credits.1040taxcup

Starting Early

Happy people tend to start preparing their tax returns as soon as all of their required documents are in-hand. Early filers often get their returns processed faster, resulting in their refunds being received earlier. Early February is a common time to start preparing tax returns.

Organizing

Do you have itemized deductions in multiple categories? Organizing deductions and receipts by category is something that happy people do. Unhappy people are the ones that tend to take a shoebox full of receipts to their accountants to sort through. Keeping your documents organized helps the tax return preparation process go faster.

Seeking New Credits and Deductions

Happy people tend to take the time to seek out credits and deductions to reduce taxable incomes, reduce tax liabilities, and pad their refunds. New credits and deductions are made available to qualifying taxpayers often, so it is important to stay up-to-date on new tax laws, available credits, and additional deductions.

Closing Thoughts

Even if you are typically unhappy, it is a good idea to get started on your taxes early. It is also a good idea to view the available deductions and credits and determine your eligibility to receive a larger refund, as many happy people do. Taxes don’t have to add to your unhappiness, they can actually bring a ray of sunshine to your life.

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Your Baby is a Person―Not a Tax Cheat

The cost of raising a child is far more than the credit you will get on your taxes for having one. That is one thing that Americans tend to forget. Some families are increasing their family sizes simply for the benefits available to large families with insufficient income to support the needs of that family. The problem with this is that having a large family really only helps at one time of the year: tax time.BabyStroller

Increasing Family Sizes

Families can take advantage of a variety of deductions which are uniquely available to them. However, families cannot utilize such deductions forever. Once those children start earning their own income, they’re really not dependents anymore and you lose those credits entirely when your children reach adulthood.

Dual Citizenship

Children who are born in one country while their parents have foreign citizenship are often deemed dual-citizens. Those with residences and equal time spent in two different countries are also considered dual-citizens. What this means is that children ― yes children ― who do not have income can be taxed if they have a bank account or any type of asset in their name. They are taxed by both governments. Money still has to be paid on assets or provable income no matter what country it comes from.

Closing Thoughts 

Some people believe that having more children will put their family into a different income bracket to give them more tax breaks and make more federal and state funded programs available to them. Rather than thinking of children as means to acquire tax credits, be certain you can financially support your family without having to rely on a big tax refund check in the mail one time a year.

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How You Can Benefit from the New Tax Deal

In case you haven’t heard, a new $760 billion tax deal was signed into existence at the end of 2015. It doesn’t mean everyone is going to get a giant tax refund, but for a few key groups this is a major change that will alter their lives for the better.TaxRefundScrabble

We’re going to go through the big beneficiaries.

Bigger Refunds for Having Kids

The child tax credit is refundable, so you can claim regardless of your tax situation. The refunded amount is 15% of any earned income above $3,000. This was set to expire in 2017, but it’s now permanent.

Tuition Tax Credits

The Hope Scholarship Credit has helped many students deal with the costs of higher education. This new tax credit has made the renamed America Opportunity Tax Credit a permanent addition. You have the chance to claim $2,500 per year in tax credits for education expenses.

More Money for Low Income Families

The Earned Income Tax Credit is a mechanism to deal with poverty. It’s become more generous in recent years, but it was set to expire in 2017. This has changed and it’s been renewed. The maximum credit families can claim is now 45% of household income, which is up from 40%.

The threshold for when this credit starts to be reduced due to household income has also been increased.

These are the big tax changes that occurred 2015. If you fall into any of these groups, these changes could well translate to thousands of extra dollars in your household accounts.

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