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As prices rise, child support also rises. If you’re a parent, you may be hoping to get a little financial relief during the upcoming tax season through deductions or deductions. Therefore, you may not get as much profit as you expected.
If you’re like me, you might end up paying the IRS instead of getting a refund from Uncle Sam. To get more out of your money in 2023, we recommend reassessing some of your recurring child-related expenses.Here are some strategies Cost reductionaccording to financial experts.
Many of the tax credits and deductions parents enjoyed during the pandemic are returning to their original limits. As a result, parents should be prepared to return less this year, says Alton Bell II, chief accountant and founder of Bell Tax and Counsel in Chicago.
“I prepare for the shock of reduced tax refunds as my dependent care credits have changed significantly,” he says.
In 2021, child care and dependent care credits have been increased to make child care more affordable for working parents. Up to $4,000 for one of her who qualifies, and if there are two or more she can be raised to $8,000 and refunded. In 2022, it will return to $1,050 maximum for one eligible person and $2,100 maximum for two or more eligible persons. Additionally, the child tax credit will revert to her $2,000 for children of all ages in the 2022 tax year. In 2021, children under the age of 6 were raised to her $3,600, and children aged 6 to her 17 to her $3,000.
With those cuts in mind, I thought it might be a good idea to ditch my five-year-old son’s aftercare this year. If you work remotely and can bring your kids home for a few extra hours during the day, consider testing this out. .
Additionally, you can contribute to Flexible Savings Account for Dependents, which allows pre-tax dollars to be used to pay for child care. Bell suggests making the most of that year’s account and also taking advantage of her employer’s FSA match if the company offers it.
You can submit $5,000 per household or $2,500 if you are married separately to the Dependents FSA in 2023.
If your child has a bottomless belly that empties the snack cupboard within 3-5 business days, you may be looking for ways to reduce your grocery bill. , especially if you are feeling the effects of rising food costs due to inflation.
One strategy for saving money is to plan your shopping in advance and avoid buying things you don’t need. Dominique Broadway, a personal finance expert and founder of Finances Demystified in Miami, Florida, made the switch from going to the store to using a grocery delivery service.
Broadway is also recommended to put the same groceries You can add carts from different shipping service providers and compare the price difference side by side.
“You’d be surprised. The difference can be quite large. Due to shipping and inflated prices, it can be as much as $40 to $50. Over time, it really adds up.” she says.
Insurance premiums can be a noticeable expense when paid monthly. Adding out-of-pocket costs for each doctor visit increases your out-of-pocket costs even more.
If you have relatively healthy children and the same can be said about yourself, consider whether a health savings account could save you money. HSA can be used to pay for medical expenses. Her HSA cap for 2023 is $3,850 for individuals and $7,750 for families. Contributions are made in pre-tax dollars and are tax deductible. To join HSA, you must have a health insurance plan with a high deductible. Health insurance with a higher deductible may have a lower premium, saving some people money. Be aware that with these plans, you may end up paying higher deductibles before your insurance starts paying for your medical expenses.
We decided to start a trial run in 2022. My son and I went to the doctor a few times that year, which brought our out-of-pocket costs to just $700. Best of all, I had $1,500 left over thanks to my employer’s donation to my HSA account. Now you can carry that money forward into the new year.
By the end of 2022, we had so many toys at home that my son and I gave away half of them. This year, free activities.
Parents often buy items for their kids only to realize that what they really value is the experience, says Broadway.
“Not only do I buy $3 activity kits from Target and buy lots of toys, but I have hours of fun playing with my kids,” she says. “That alone, I think, is a great way to cut costs, build better relationships with our children, and create more memories with them.”
Speaking of experiences, there is a trampoline park near my house for $20 a month for unlimited play. It seems more cost effective to take my son there than to buy more trucks and excavators that I trip over.
If any of these strategies lead to savings this year, Broadway suggests investing money in custody accounts for future expenses related to children and helping children build wealth.
“Invest that money in your kids. Make it work for you and your kids.”
This article was written by NerdWallet and originally published by The Associated Press.