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4 Things New Parents Need to Know About Taxes

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Babies and taxesBecoming a parent is one of the biggest transformations you'll ever go through. As you consider nursery-room renovations, midnight feedings, diaper changes, and the other challenges of parenthood, probably the last thing on your mind is the impact that having children can have on your income taxes.

Fortunately, when it comes to taxes, the news for parents is generally good.

Here's a brief look at some of the ways that having children can help you save on your tax return.




Motley Fool contributor Dan Caplinger has enjoyed the tax and other benefits of his daughter for seven years. You can follow him on Twitter here.


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What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

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ilm9p

Responsible adults typically have two or three children while the dirty animals on welfare sire seven or eight. Reson for the difference, the scum on welfare get it all paid for by the rest of us. The more they sire the more we pay. While responsible adults have to pay for their children, the scum on welfare get everything for free.

June 18 2012 at 4:08 PM Report abuse rate up rate down Reply
Setanta

how silly and awkward !
simply apply for an earned income tax CREDIT the exact same way the ILLEGALS do and CLAIM YOUR DEPENDENTS AND GET A CHECK.
do you think YOU'LL HAVE TO PROVE ANYTHING ? LOL !

June 18 2012 at 3:25 PM Report abuse rate up rate down Reply