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.
Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.