Tax rules on dependents and exemptions apply to everyone who files a federal income tax return. If that's you (and it probably is), here are six important facts the IRS wants you to know about dependents and exemptions, to help you get your tax return together in time for this April's deadline.
For a long time, a popular tax-saving strategy for high-income families was to funnel unearned income through their children to reduce their overall taxes. The IRS adopted the "kiddie" tax in the 1980s to limit its effectiveness by taxing certain amounts of children's unearned income at a very high rate. If you are a high-income family with children, it pays to learn about the kiddie tax and how you can make smart investments to avoid it.
Every working parent knows that the cost of good child care is expensive and ever-increasing. Luckily, the federal government offers two tax breaks that can help defray some of these costs: the child care credit and dependent care accounts. If you pay for day care, preschool, or a nanny, it pays to learn about these two tax breaks -- they could save you thousands of dollars.