Sandra Block for Kiplinger writes: Although tax day thankfully occurs only once a year, tax-changing events, such as
marriage, divorce and the birth of a child, happen year-round. Any of
these events could call for a midyear adjustment in the number of
allowances you claim on your Form W-4. You should also start keeping
track of expenses that will help you qualify for family-friendly
credits, including:
Adoption tax credit. For 2013, this credit is worth
up to $12,970 in adoption-related expenses per eligible child. A credit
is more valuable than a deduction because it delivers a
dollar-for-dollar reduction in your tax bill. The credit is no longer
refundable, so if it exceeds the amount of your tax liability, you won’t
get a check for the extra amount. You can, however, carry over unused
credits for up to five years.
If you’re in the process of adopting, keep a scrupulous record. Not
only will it ensure you can claim the maximum credit you’re due, it will
also help you answer questions from the IRS. Because this credit is so large, it
tends to attract extra scrutiny, so be prepared to substantiate all of
your expenses.
Child- and dependent-care credit. You may qualify
for this credit to help defray the cost of paying someone to care for
children under age 13 while you work or look for a job. The credit is
worth up to $3,000 for the care of one child or $6,000 for two or more
children. The credit is a percentage of the amount spent on child care
and gradually decreases as income increases. Families that earn more than $43,000 can claim only 20% of deductible costs.
Friday, June 7, 2013
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