Tax breaks for dads on this Father's Day
Sunday, June 16, 2013
Dad. Pop. Papa. Daddy. Father. Whatever you call your dad, enjoy not only Father's Day, but every day with him.
My dad, whom we lost many years ago way too early, was of the era where fathers didn't play as obvious a role in their children's lives. But my late brother and I knew that both our folks played critical, and loving, roles in our lives.
Father and son fishing. Photo courtesy Sue's Point of View via photopin cc
The debate continues today over a dad's involvement in the day to day upbringing of his kids. I do what works for everyone -- dad, mom and the kiddos -- in your family.
And let your Uncle Sam help out with raising the kids via the federal tax code whenever you can.
Here are some tax tips that all dads (and moms) should check out.
Dependents: Kids cost a lot, but dads and moms can recoup some of that money when they claim qualifying dependent children on their tax returns. Each child counts as an added exemption, a dollar amount (adjusted each year for inflation) that is subtracted from the folks' adjusted gross income to get to a lower taxable income amount.
Filing status: If you're a single dad (or mom), make sure you pick the proper filing status. In most cases, a single parent files as head of household. In addition to claiming the child-related tax breaks, a head of household filer also gets a larger standard deduction and more favorable income tax rates.
When a single dad is a widower, he gets another filing option for a while. The year in which he loses his wife, he can still file a joint tax return. That provides the single dad with the same benefits allowed a married couple.
For the next two years, if the widowed dad then might be able to file as a qualifying widower with a dependent child.
Child tax credit: This is one of easiest tax breaks. If you have a dependent child younger than 17, you can claim this $1,000 tax credit. That's one grand per kid. And it's a credit, meaning that it's a dollar-for-dollar reduction of any tax you owe. Some parents also may be able to claim the additional child tax credit, which could net them a refund.
Adoption costs: Adding to your family via adoption is time-consuming and expensive. Mostly expensive. But the adoption tax credit can help cover some of those costs.
Child care expenses: Parents have a couple of tax-advantaged ways to help pay for child care costs. If their employers offer a child care flexible spending account, workers can put in up to $5,000 a year to help pay for the kids' care.
There's also the child and dependent care credit. When you pay someone to look after your kids who are age 12 or younger while you work or look for a job, you can claim a portion of those costs, based on your income and the number of youngsters being watched, as a credit.
And you can count summer day camp costs when you figure your dependent care credit.
Dad = priceless: Every year there's a calculation of what a mom's usual household duties would net if she were paid for the tasks. A lot of mothers balk at not only the figures, but also the exercise itself.
Well, here's a chance to give equal treatment to dads.
Insure.com has a Father's Day Index and this year, reports Investopedia, dear old dad's household worth is up. A father's helping hands around the home are worth $23,344 a year, up from last year's $20,248.
The increase is primarily thanks to higher mean hourly wages, per Bureau of Labor Statistics data, for drivers, teachers, coaches and plumbers.
But despite our penchant to quantify everything, we all know that our parents' love and care and support are priceless.
Be sure you let your dad know that every chance you get.You also might find these items of interest:
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