By: Krista Royal, CPA at Gary DellaPosta, CPA & Business Advisors
There are many tax changes coming for the end of 2012 and 2013! With all the current back and forth in the political arena and the complicated tax code, it can be hard to understand what is changing and who it affects, so we have simplified it for you and what it means for you!
Here are just a few that directly impact families:
Dependent Care Tax Credit:
- Depending on their income, taxpayers may receive a tax credit for child care expenses for dependents under age 13 that allow taxpayers to work or look for work.
- The maximum expenses qualifying for the dependent care credit will decrease from $3000 to $2400 for one child and will decrease from $6000 to $4800 for two or more children.
Impact: lower income working taxpayers with children.
Child Tax Credit
- Depending on their income, taxpayers with one or more qualifying children may be able to claim a
child tax credit of up to $1000 per qualifying child.
- Since 2003, the child tax credit has been $1000 for each qualified child of a taxpayer who is under
age 17 at the end of the year. However, this was a temporary provision that expires at the end of 2012 and beginning in 2013, the credit will revert to $500 per child. In addition, the refundable portion of the credit
will be reduced.
Impact: lower income taxpayers with children.
Earned Income Tax Credit:
- The earned income tax credit is a benefit for certain people who work and have low to moderate
- In 2009, a separate credit category for three or more children was added, provoking an increased
credit for taxpayers with three or more qualifying children. However, that was a temporary measure which will expire at the end of 2012. This will reduce the maximum credit for individuals with three or more
children by $650 in 2013. Other changes that enhanced and simplified the credit calculation are also set to
Impact: lower income taxpayers with large families.
American Opportunity Tax Credit:
- This tax credit provided a tax credit up to $2500; up to 40% of the tax credit is refundable in many instances. The tax credit is for qualified college expenses (tuition, books, room and board, etc). This tax credit provided potential refunds for taxpayers for up to 4 years, and expires in 2012.
Impact: lower income families with parents and/or qualifying children in college.
*** A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund.
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