- The Child Credit is $2,000 per child age 16 and younger. Part of this credit is refundable if the amount of taxes you owe is less than the amount of your credit. Your dependent must have a Social Security Number to qualify.
- The Child Care Credit is $3000 for one child or $6000 for 2 or more children in day care. After-school care and summer day camp programs count. Over-night camps do not!
- The Child Care Credit is actually a Dependent Care Credit. You can count the day care / household services you pay for a dependent of any age (including a spouse or a parent) who is physically or mentally incapable of self-care at any time during the year.
- Generally, you must pay more than half the support in order to claim someone else as a dependent, but if you and your siblings together support your parent, IRS Form 2120 will allow one of you to claim the dependent exemption even though no one paid more than half your parent’s support.
- If your child is a full-time student for any part of 5 months of the year and is under 24 years old, he (she) may still be your dependent.
- The tuition your college-bound child paid is a write-off on YOUR tax return as long as the child is your dependent. If your student child is not your dependent, you can’t claim the tuition on your return even if you paid it.
- Generally, your dependent must live with you. Your parent is the exception to that rule. If you provide more than half the support of your parent, you may claim the exemption even though your parent does not live with you.
- If you are supporting a disabled person that lives with you, that dependent may qualify you for the earned income credit.
- If you are disabled or a full-time student, you can claim child care paid for the months you are going to school or are totally disabled.
- You can deduct up to $2500 of the interest paid on your student loan even if you weren’t the one who made the payments as long as you are legally responsible for the debt (Phase-out rules apply).
- If you are taking a course at any accredited school, you may be able to take a credit on your return for the tuition, books, and course equipment you paid.
- You can use your 529 Plan for tuition, books, equipment for college, room and board, or any accredited apprenticeship program.
- You can use your 529 Plan to pay off up to $10,000 of your or your sibling’s student debt loan, but only $10,000 per borrower is allowed.
- You can use your IRA for the down payment on a house (up to $10,000 for a first-time homeowner), for college education costs, for student loan interest (up to $10,000), for excessive health expenses, for health insurance if unemployed, and other hardships. You can use up to $5,000 for adoption expenses or the birth of a child. You will owe tax on the withdrawn amount, but no penalty for early withdrawal. Caution! This is not true for your 401(k) money!
- If you have a profit in your self-employed business, 100% of your health insurance premium is a tax deduction even if it is Medicare or a family plan.
- If you will owe taxes, don’t wait until you have the money to pay to file your tax return. The failure to file on time penalty is 5% per month! An extension gives you more time to file the return, but not to pay what you owe. You owe interest on the tax you owe beginning on April 15th and continuing until the tax is paid in full, no matter when you file the return.
- You can pay the balance due on your return as well as estimated taxes with your credit card.
- Who Pays Taxes? According to IRS statistics: More than 100 million U.S. households, or 61% of all taxpayers, paid no federal income taxes in 2020, according to a report from the Tax Policy Center. The top 20% of taxpayers paid 78% of all federal income taxes in 2020. The top 1% of taxpayers paid 28% of taxes in 2020.
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Our National Debt (it’s not so funny!) as of Aug 31, 2020 the US debt was $26.7 trillion.
The federal government spent $6.6 trillion in fiscal year 2020 — or $19,962 per person.
How much does the US government spend every minute? $12.6 million every minute.
In 2005, the US government spent a Billion dollars every 8 hours and 20 minutes. In 2012, the government spent a billion dollars every 2 hours and 18 minutes. In 2020, the government spent a Billion dollars every 8 minutes!
Imagine This!
If you are married and have two school-age kids, your family’s share of the amount the federal government spent in one year is $79,848. But wait! That money was borrowed! So more to the point, each of your children owes $39,924 of their future earnings for 2020 alone!
If you made $100,000 a year and your entire salary went to the government in taxes, you would have to work 267 million years to pay off the current debt. It would take the entire salary of 6 and a half million workers earning $100,000 per year just to meet the government’s annual budget!
So – Tax the Rich!
Let’s take the total wealth from the Billionaires! We need 26,700 billionaires in order to pay off the national debt. As of March 2020, there were 614 in the US.
Since we don’t have enough Billionaires in the country, let’s tax the Millionaires! Take the entire wealth of 26 million, 700 thousand millionaires and pay off the national debt. Alas! Currently there are 21,951,000 millionaires in the US. We are 5 million millionaires short.
But more to the point, if you earn $250,000 per year and the government taxes you at 49.6% (this is the actual proposal for federal, state, medicare, and social security tax), it will take you 216 million years to pay off the current debt.
In 2019, there were 10.42 million households with $200K+ (no data exists for $250K), so “taxing the rich” will only take 270 million years to pay off the current debt (if the US government does not borrow one more penny for the next 270 million years)!