4 expenses for parents to rethink in 2023

When inflation rises, child care expenses do, too. If you’re a
parent, you may be hoping to get a little financial relief during the
upcoming tax season through deductions or credits. But since there have
been recent reductions to both of the child tax credits, you may not get
as much back as you anticipated.

If you’re like me, you could end
up paying the IRS instead of getting a refund from Uncle Sam. To help
your money go further in 2023, you may want to reevaluate some of your
recurring child-related expenses. Here are a few strategies for reducing
costs, according to finance professionals.

CHILD CARE

Many
of the increased tax credits and deductions parents enjoyed during the
height of the pandemic are reverting to their original limits. As a
result, parents should be prepared to get less back this year, says
Alton Bell II, principal accountant and founder at Bell Tax Accountants
& Advisors in Chicago.

“I would prepare for a tax refund
reduction shock because the credit around the dependent care has
significantly changed,” he says.

In 2021, the child and dependent
care credit increased to make child care more affordable for working
parents. It was raised to a maximum of $4,000 for one qualifying person
and $8,000 for two or more qualifying persons, and potentially
refundable. For 2022, the amount has gone back down to a maximum of
$1,050 for one qualifying person and $2,100 for two or more.
Additionally, the child tax credit is reverting to $2,000 for children
of all ages for the 2022 tax year. For 2021, it increased to $3,600 for
children under six and $3,000 for kids ages 6 to 17.

With these
cuts in mind, I thought it might be a good idea to ditch aftercare for
my 5-year-old son this year. My living room may look like the scene of a
volcanic…

Read complete post here:
Source link