Sen. Ben Sasse swears that his book is not just 320 pages of old man "get off my lawn" rants at neighbor kids.
First of all, the 45-year-old Sasse is far from old.
Plus, says the Nebraska Republican, he didn't write "The Vanishing American Adult" just to complain about these kids today. Rather, Sasse's goal is to get a national conversation going on how parents, communities and governments, can help our children grow up — with growing up being the key phrase — so that they can better survive in our highly-competitive global economy.
The core advice from Sasse, a father of three, is that overprotective parents need to stop coddling their young adult children and help them become active and engaged citizens on their own.
But he doesn't just take moms and dads to task.
Public policy to blame, too: In the book, which is subtitled "Our Coming-of-Age Crisis — and How to Rebuild a Culture of Self-Reliance," Sasse also points to what he calls misbegotten government programs that have helped stall young people's participation in traditional coming-of-age rites, such leaving home, starting a family and becoming economically self-reliant.
The most direct government contact that parents and their kids ever have is through the tax code. So Sasse's book got me thinking about child related tax breaks that are currently available.
I decided to focus on seven popular child/parent tax related situations, which I've highlighted below.
I'm just going to list them with a few tax details and leave the evaluation as to how these tax breaks might help or hamper a child's growth into a productive young adult to the Cornhusker State senator and child psychologists.
1. Dependent exemption
From the moment a child makes his or her screaming appearance into the world, that little human is an automatic tax break. A dependent child can be claimed as an exemption, which provides a dollar amount that's subtracted from your adjusted gross income. For the 2016 tax year in case you got an extension and have yet to file, that's $4,050. For the 2017 tax year, inflation was low so the exemption amount stays the same.You can claim this exemption until the child reaches age 19 or 23 if a college student. There's no age limit on a dependent exemption claim for disabled children.
2. Adoption tax credit
Many families grow thanks to adoption. Uncle Sam heartily approves, offering these self-selected families a nice tax credit. The adoption tax credit is worth up to $13,460 per child on 2016 taxes; it's adjusted annually for inflation, meaning it's worth $13,570 for 2017 adoptions.There are income limits (also inflation adjusted annually) that could reduce or eliminate your credit amount. And, bad news, the adoption credit is nonrefundable, meaning that if it's more than the tax you owe, the excess won't come back to you as a refund. But you do get to carry it forward for up to five future tax years.
3. Child tax credit
On the same "wow, that's great!" level as the exemption for your child is the child tax credit. This $1,000 tax break is available simply because you have the kid. The credit is available for dependent children age 16 or younger.Even better, some families can claim the additional child tax credit, which is refundable. That means you could get the credit amount as a refund if you don't owe any tax for it to reduce.
4. Child care credit
Child care can be costly. However, when parents work, you can count at least part of what you pay others to watch after your youngster as a tax credit, specifically the child and dependent care credit.The tax credit could be worth as much as $1,050 in connection with the care costs of a child younger than 13. If you have two more dependent kids in day care, the credit could be as much as $2,100.
Note, too, that the overseeing of your youngsters doesn't have to be strictly conventional. As this week's tax tip notes, day camp costs can count toward claiming the child care credit.
5. Young family employee
If your child is older, he or she might look for a summer job. If you own your own business, you might be able to do your kiddo and yourself a favor by providing that job. The benefit is not just from having your youngster around all summer.If you're a sole proprietor or you and your spouse are partners in your own business and hire your child, you get some tax breaks. As long as the youngster is 17 or younger, you don't have to pay Social Security or Medicare taxes on a portion of your child's earnings. The salary you pay your child — and yes, it must be a real payment for real work or the Internal Revenue Service will come after you — also is exempt from unemployment tax when your employed child is younger than 21.
6. Education expenses
Savings for your youngster's education also provide tax breaks.There's the Coverdell Education Savings Account, where you can contribute up to $2,000 a year for the educational costs of a child younger than 18. There are no age restrictions if the child has special needs. The money can be taken out tax free to pay educational costs. Plus, Coverdell money isn't limited to college expenses; it also can be used to pay for qualifying elementary and secondary.
Similarly, putting money into a 529 plan for your kid's eventual college costs offers tax-free savings.
And wealthy grandparents get a twofer by paying a grandchild's college tuition. Not only does it help the youngster (and his parents), it's a good estate planning move. It can help reduce your overall assets value to a level below the $5.49 million level (that's for 2017; it's adjusted annually for inflation) at which the federal estate tax applies. This gift amount is not subject to the annual tax-free gift tax exclusion, which currently is $14,000 (also adjusted annually for inflation). Neither does it count toward the lifetime gift tax exclusion.
7. Health care coverage
As we all know, the Affordable Care Act, aka the ACA and/or Obamacare, lets parents keep their young adult children on their health care policies. I'm adding this as a tax-related child provisions because Obamacare is intricately tied to taxes.And although the debate continues on how to repeal and replace Obamacare, this provision seems likely to stay. Now, and presumably in the future, where a parent's health insurance plan covers dependents, that parent can add a child to the coverage until the youth turns 26.
As I mentioned at the start of this list, I prefer to leave the discussion as to whether these (and other) tax policies aid or impede a young person's maturation process to parents (of which I'm not, my assisting my elderly mother and it's tax implications notwithstanding) and their members of Congress.
But if you're so inclined to share your thoughts, please feel free to do so via a comment or two.
You also might find these items of interest:
- Millennials depend on mom and dad for tax help
- Millennials find tax refund anticipation loans appealing
- Most millennials want houses like their parents, eventually
source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/wUzl-1c5058/sasse-booket-helping-kids-grow-up-child-related-tax-breaks.html
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