Tax Credits for Summer Camps and Childcare

Summertime has a special meaning for children: bike rides, swimming, sleeping late, and most importantly, no school for two and a half months. But many parents—whose work schedule is unaffected by the changing seasons—dread the end of the school year, because finding summer childcare during the day becomes a difficult (and expensive) task.

Sound stressful? Don’t worry, there’s good news.

To ease the financial burden of summer expenses, the IRS offers special tax credits for qualifying taxpayers who pay for summer childcare. This means that the money you pay these next couple of months for daycare, summer day camps, and even in-home baby-sitters can help you earn a significant tax credit on next year’s return—up to 35% of what you pay now. This helps offset the cost as you go to work every day (or look for work, if you are unemployed).

Of course, there are certain rules that apply:… Read More

Going Paperless

It’s an overused cliché in movies: a client arrives at his accountant’s office and dumps a shoebox full of receipts on the desk, fistfuls of white paper spilling over the sides. If you regularly keep receipts and documentation for tax write-off purposes, this scene may sound familiar. But it doesn’t have to be—much of our daily business has gone virtual, with loan statements, bank statements, credit card accounts, and even tuition bills delivered via email or on a secure server online.

Interested in going digital? Here’s what you need to know.

Invest in a good scanner.

The IRS was actually ahead of its time when it began accepting scanned receipts in 1997, in a rule called Revenue Proclamation 97-22. But the documents need to be legible, clear, and easy to access—which means that if your receipt is bunched, blurred, or otherwise illegible on your screen, it will likely be rejected, or … Read More

Parents: Get the 4-1-1 on the 529 College Savings Plan

Have a child who’s headed off to college in the future? It’s never too early to start planning how you’re going to cover the rising costs of higher education. A 529 savings plan can help you save for your child’s (or other dependent’s) college tuition. The rules differ by state (you can look up your state here), but the basics are the same: you make regular contributions to an investment and then withdraw from that pool of money to pay for college-related expenses.

The good news: your withdrawals are tax-free, meaning you won’t be subject to any taxes each time you take out money to pay for a qualified expense.

The bad news: not all college-related costs are considered qualified expenses.

So before your child heads off to earn his first degree, you’ll want to do some homework yourself. Using 529 money to pay for the wrong kinds of expenses … Read More