Replacing lost tax breaks
for your growing children
YBy Cindy Nichols
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
No more dependent day care credit. The maximum
annual credit for the cost of caring for your children
while you and your spouse work, is generally $600 for one
child and $1,200 for two or more children. But the credit is
only available for children under age 13.
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.
Child Tax Credit (CTC)
no longer available. With the CTC
you receive a $2,000 credit ($1,400
of which is refundable) for each
child. Unfortunately, the credit disappears
when the child reaches age
17. Remember, a tax credit is a dollar
for-dollar reduction of your taxes
due, so as each child reaches 17, your
taxes will go up by the full amount of
the previously claimed credit.
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.
Goodbye qualifying child. At 19, your child
is no longer eligible for the $500 dependent credit as a qualifying
child, unless they are a full-time student. In that case, they
stay eligible for another four years (until age 24). Once they
cease to be a qualifying child, they may still be eligible for the
earned income) are in place.
Tax move: If your child is going to college, claim one of
For instance, the maximum American Opportunity Tax Credit
(AOTC) is $2,500 per student per year, although it is subject
to an income phase out. Once they are out of school, call
your tax accountant to discuss your situation. He/she can run
through some tax planning scenarios to determine what other
tax breaks may be available to you.
•Business Start Up
34 • EXPO EDITION 2019 813.682.9364