Some of the rest of the tax reform may ease the blow of the overhead.
The tax relief and employment act (GOP) overhauled the tax code, including raising the child tax credit, doubling it to $2,000 per eligible child.
Lawmakers also extended the child tax credit to high earners: a breakthrough that would begin to phase out taxpayers’ married and adjusted income of $400,000 (single $200,000). Under current law, the child tax credit begins to be phased out, and the co-applicant has been married for $110,000 and the single person is $75,000.
In addition, lawmakers to keep the children and families to take care of the credit for a child under the age of 13, worth up to $1050, or for two children under the age of 13, worth up to $2100.
Finally, the bill has kept a complete break, allows the staff to a support flexible spending account deposit up to $5000 in pre-tax dollars (married taxpayers $2500, separate the archive), to pay for qualified dependent people.
Initially, the house proposal called for the elimination of the rest of the care FSA. Lawmakers later decided to keep it.
“Dependency on FSAs is still there, and it’s A huge victory for families who can contribute to these accounts,” said Douglas a. Boneparth, President and financial planner of Bone Fide Wealth in New York.
“From a conservation point of view, it’s more beneficial,” he said.
It is as expensive as housing or university
According to a report by Child Care Aware of America, childcare costs for both children are similar to those of housing.
The United States “child care awareness” found that in the northeast, the average annual care for infants and four-year-olds was $24,053. In contrast, the average cost of housing in the country is $21,140.
Even in the south, where care costs are minimal, the average health care cost for children and four-year-olds is $16,704 per year, just a few dollars for the average housing cost of $16,741.
Michelle McCready, director of public policy and research at Child Care Aware of America, said: “families are really struggling to pay for the Care of their children. “When there’s a kid, they’re uncomfortable and trying to understand what their budget is going to be.”
According to the university committee, the average tuition, tuition, and room and board costs of public four-year colleges will be $20,770 starting in 2017.
No tax cuts will cover the full cost of someone taking care of your child, but parents have some tools to help pay for it.
Pay the bills
Assuming that relying on the FSA is available at work, it may be the most significant for high earners, who can save more on taxes if they are in higher brackets. This is because any money entering the account will escape federal income taxes.
Parents can also use credit for child and family care. Warning: you cannot use this credit and FSA to bear the same costs.
Parents of school-age children should also note that the tax code also allows them to use the 529 savings plan to pay for private primary and high schools. Under current law, these accounts can be tax-free, and parents can use the money tax-free as long as they are paid for education.
Pull the grange park, Illinois bright walter Financial companies (Brightwater Financial), head of the certified public accountants and Casey drews (Cathy Derus) said: “people for the use of 529 a bit cautious. “But be aware that this is still a good thing.”