Money-Saving Tax Tips for Working Parents

Money-Saving Tax Tips for Working Parents

Being a working parent is no easy feat. Not only do you have to manage the demands of your job, but you also have to grapple with what could be some pretty hefty child care expenses. The silver lining, though, is that there are several steps you can take to eke out tax savings. Here are a few to look at:

1. Contribute to a dependent care FSA

Many people are familiar with flexible spending accounts, or FSAs, in the context of healthcare. A dependent care FSA allows you to set aside pre-tax dollars for child care costs, which include daycare tuition, after-school care, and summer camp. This year, you can put up to $5,000 into a dependent care FSA if you're a single parent or are married and filing a joint tax return.

2. Claim the Child and Dependent Care Credit on your taxes

The Child and Dependent Care Credit is a credit you can claim if you paid for care for a child under age 13 in your household. The credit allows you to claim a percentage of your child care costs of up to $3,000 for one child or up to $6,000 for two or more children for the 2023 tax year.

3. Don't forget about the Child Tax Credit

The Child Tax Credit allows you to claim up to $2,000 per child in your household under the age of 17. This credit is not reserved for working parents and can be claimed regardless of whether you pay for child care or not.

Juggling a job and children is not a simple thing. The good news, though, is that there may be certain tax breaks available to you to ease the burden of having to pay for care and to cover the cost of raising your children.