Gen X Parents: 3 Tax-Time Moves That Could Keep More Money in Your Pocket
Written by
Catherine Collins
Edited by
Rebekah Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Gen X has numerous financial responsibilities, perhaps more than any other generation. They are known as the sandwich generation because many of them are working, raising children and caring for aging parents all at once.
According to a survey by Manulife, 68% of Gen X said that saving for retirement is their top financial priority, followed by 54% that said day-to-day expenses and bills are their priority. The survey also found that half worry about inflation in the cost of living.
To ensure they can keep as much of their hard-earned money as possible, it’s important for Gen X parents to take advantage of specific tax benefits that can lower their taxes and keep more money in their pockets. Below are three tax-time moves Gen X needs to know about.
Also here are tax mistakes Gen Xers are likely to make.
Â
Â
Claim the Child Tax Credit
Parents with children under the age of 17 can claim up to $2,200 per qualifying child as part of the Child Tax Credit, per the IRS. This is especially helpful for families with multiple children because it is a tax credit, not a deduction, meaning it directly reduces the amount of tax families owe (as opposed to reducing taxable income like a deduction).
Â
Use the Child and Dependent Care Credit
Although this credit sounds similar to the child tax credit, the child and dependent care credit is specifically for parents who pay for daycare. Some after-school programs and summer camps may also qualify. If you meet the criteria for this tax credit, you can claim up to $3,000 for one child or $6,000 for two or more children, per the IRS.
Get Education Tax Credits
For Gen X parents who have college students, there are two education tax credits they might be eligible for. One is the American Opportunity Tax Credit (AOTC), which Gen X parents can use for up to $2,500 per student for expenses like tuition, books and more, according to the IRS. The Lifetime Learning Credit can also give up to $2,000 on tax returns for educational expenses, per the IRS.Â
Ultimately, speaking to an accountant to find whether or not they qualify for these credits is one of the best ways Gen X can save on their taxes this year.
More From GoBankingRates
