HOW TO LOWER YOUR TAXES WITH YOUR CHILDREN
Save money on your taxes with your kids! Housing tax and income tax, lowered according to your family. You may wish to speak to a certified tax expert or CPA online with a service like TurboTax Live, which allows you to sit with your computer in your own home and get help online, whether you live in Portland or Charlotte or any other US city. Indeed, US taxation is based on the concept of family quotient which is the number of shares by which the household income is divided for the calculation of tax. The more children you have, the lower your income tax will be. It is calculated as follows: net taxable income / number of tax shares of the tax household. The family quotient allows taxpayers to determine their marginal tax bracket which will be used to calculate the tax. We can say that the family quotient corresponds to taxable income for 1 share. The tax reduction from which you benefit via this principle of family quotient is capped this year at 1,567 Dollars for the half share of each child. A married couple with three children can therefore deduct a maximum of 6,268 Dollars in income tax.
With the deduction at source, the change in the family situation of the tax household is taken into account very quickly. In case of birth, you have indeed 60 days to inform the tax authorities. The latter will have 3 months to calculate your new rate of withholding tax and communicate it to the collecting organizations. When your child turns 18, you must choose between keeping him in your tax home or asking him to complete his own tax return. In fact, your adult child can be attached to your tax household until he is 21, and up to 25 if he pursues higher education. This choice mainly depends on the tax bracket in which your household is located. If your tax home is in the upper brackets of the scale, it is in your best interest to keep your adult child in your tax home as long as possible in order to benefit from the additional half-share. If your tax home is in the low brackets, which are increasing very quickly, it is better to ask your adult child to complete his own declaration.
In fact, if the child receives income and is attached to you, you will be taxed on it at the risk of pushing you into a higher bracket. By detaching your adult child from your tax home, you certainly lose half the share, but you can deduct from your taxes alimony equivalent to the cost of food and accommodation. This pension is capped at 3,500 dollars if he lives at the family home and at 5,888 dollars if he lives alone.
If your child has substantial income, know that he can be detached from your tax home, even if he is a minor. Very useful if you are the parent of a renowned You Tuber or a talented entrepreneur who has higher income then yours. At the level of the housing tax of your main residence, having children again gives the right to a tax benefit. Each dependent child gives you a dependent tax deduction for family expenses on your tax base. This reduction applies automatically. Each of your children can also lower your income tax if they are in school. The tax reduction depends on his level of study: your high school student will save you 61 Dollars, and your high school student 153 Dollars. If your child goes on to higher education, the savings amount to 183 Dollars.
Children allow you to increase the number of shares of the tax household and thus increase your family quotient, which influences, downwards, your marginal part of the income tax. But your children also allow you to benefit from abatement on the housing tax reduction tax for school fees. Each single person counts for a share. Each married or civil partner also counts for a share. A tax household without children therefore consists of 2 parts. Children count for half a share but from the 3rd child, a child counts for a share. Thus, a couple with two children counts for 3 shares. A couple with 4 children counts for 5 shares.
Barry Lachey is a Professional Editor at Zobuz. Previously He has also worked for Moxly Sports and Network Resources “Joe Joe.” he is a graduate of the Kings College at the University of Thames Valley London. You can reach Barry via email or by phone.