Parents can use all the tax breaks they can get. But amid a proposal to expand tax breaks for parents at the expense of non-parents, many have noted that there are already plenty of tax provisions that give breaks to families with children.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through three types of tax breaks parents get. First, Dan notes that personal exemptions apply for every member of a family, giving those with children an extra reduction in taxable income that reduces their taxes. Second, Dan runs through some tax credits that specifically apply to those with children, including the Child Tax Credit and the Child and Dependent Care Tax Credit. Finally, Dan points out that some credits give much larger incentives for families with children, using the example of the Earned Income Tax Credit, which has a maximum more than 10 times higher for families with three or more children than for those without children. Dan concludes that reasonable people can disagree about whether the current level of parental support from the tax code reflects the right balance.
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