Special Tax Considerations for Dads06.12.13
Happy Father’s Day to all of the dads out there! Did you know that not only are there a great many tax considerations related to fatherhood, but many of them are often overlooked. Your tax return is a unique place to take advantage of tax benefits that come with being a dad. Here are just a few of those tax tips and considerations:
- To start with, there is no better tax benefit than having a new child and dependent on your tax return. Most likely you may now be able to claim an additional exemption amount for the new dependent as well as the various tax credits related to a child. The credits include the Child Tax Credits, Child and Dependent Care Credit—more commonly referred to as the “daycare credit,” and even the Earned Income Tax Credit for families with an income of less than $51,567.
- If this is your first Father’s Day, you may be able to claim the medical expenses you paid since January for the birth of your child and all well-baby and first-time parent medical check-ups.
- If you coach, umpire, or otherwise volunteer your services for your children’s activities, you may be able to claim a charitable contribution deduction. Your mileage to and from the volunteer activity is deductible at 14 cents per mile and out-of-pocket expenses for supplies, equipment, and uniforms necessary to participate in the volunteer activities are also deductible as a charitable contribution. So keep those receipts and a mileage log for all your travel as a volunteer in youth organizations.
- If your children are under the age of 13 and you sent them to a day camp while you and your spouse worked this year, you may be able to include your expenses for the day camp with other child care expenses you paid during the year to claim a the credit for child care expenses. You are allowed a credit of between 20 and 35 percent of your expenses up to $3,000 for one child and $6,000 for two or more children when you file your income taxes. Make sure you get a receipt from the daycare provider(s) and the day camp.
- If you are a single dad, don’t forget to file with the correct filings status. You may be eligible to use the Head of Household filing status if you have physical custody of your child, are single, and provide the main support of your household. This will qualify you for lower tax rates, higher credit amounts and potentially many other tax benefits.
Being a dad is hard work that brings with it personal reward but sometimes with seemingly little financial reward. Ironic as it may seem, your tax return can be a place to pick up some of those financial rewards for being a dad.