Back-to-School Tax Tips for Smart Family Savings

The back-to-school season brings a whirlwind of activity—school supply shopping, new schedules, and the daily juggle of family life. Amidst all this hustle and bustle, it's easy to overlook the small, yet significant ways we can secure our family’s financial future. By taking a little time now to consider some savvy tax strategies, families can experience real savings that help fund their children's education and secure their own financial well-being.

Child and Dependent Care Credit

This often-overlooked credit can significantly ease the financial burden for families. Applicable to children under 13, the credit can be claimed for after-school care, day camps, and even nanny services. Many parents miss this opportunity, but it's a simple way to reduce taxable income while accommodating childcare needs.

Education Tax Credits

Understanding available education tax credits can lead to substantial savings. The American Opportunity Tax Credit offers up to $2,500 per eligible student, and importantly, 40% of this credit is refundable. The Lifetime Learning Credit, on the other hand, provides up to $2,000 per return and is an excellent option for ongoing education costs. Don’t forget to save Form 1098-T and all receipts for books and supplies—these documents are key to claiming these credits.

Educator Expense Deduction

For those inspiring individuals among us who shape young minds, there's the Educator Expense Deduction. Eligible educators can deduct up to $300 (or $600 for joint filers who are both eligible) on their tax returns. This includes supplies, books, and even professional development expenses, offering a little extra relief even if you don't itemize deductions.

Value of 529 College Savings Plans

It’s never too late to start contributing to a 529 college savings plan. These accounts offer tax-free growth and withdrawals for qualified education expenses. Some states even offer deductions or credits for contributions you make. Remember, you can contribute to a 529 plan even after the school year has started, so it’s worth exploring this tax-advantaged option today.

As the school year progresses, take a moment to review educational expenses with a tax-saving perspective. Keep track of those receipts, and if any questions arise, don’t hesitate to consult a tax professional. These tax breaks are within reach with a bit of preparation, helping to ease financial stress next tax season.

We encourage you to take action now and consider setting up a time to discuss your unique tax situation with us. Addressing these opportunities proactively could mean more savings for your family’s goals.