Other tax changes may cushion the blow of spending.
The tax cuts and jobs act overhauled the tax code, including raising the child tax credit to double it to $2,000 per eligible child.
Lawmakers also extended the children’s tax credit to high earners: a breakthrough that would begin phasing out taxpayers’ married and adjusted earnings of $400,000 ($200,000 alone). Under current law, child tax credits have been phased out, co-applicants have been married for $110,000 and single people for $75,000.
Lawmakers also want children and families to take care of children under 13 (worth up to $1,050) or two children under 13 (up to $2,100).
Finally, the bill to keep complete rest, allowing employees to support flexible spending account deposit up to $5000 in pre-tax dollars (married taxpayer $2500, separate the archive), to pay for the eligible dependents.
Initially, the house proposed scrapping the rest of the care FSA. Lawmakers later decided to keep it.
“The reliance on the FSA is still there and it is a huge victory for families who can contribute to these accounts,” Douglas said. Boneparth, President and financial planner at Bone Fide Wealth in New York.
“From a conservation standpoint, it’s more beneficial,” he said.
It’s as expensive as housing or college
Child-care costs for two children are similar to housing costs, according to Child Care Aware of America.
In the northeast, the average annual care for infants and four-year-olds is $24,053, according to child care awareness. By contrast, the average cost of housing in the country is $21,140.
Even in the south, where care costs are low, the average cost of health care for children and four-year-olds is $16,704 a year, just a few dollars, and the average cost of housing is $16,741.
Michelle McCready, director of public policy and research at Child Care Aware of America, said: “it’s really hard for families to pay for Child Care. “When they have a child, they feel uncomfortable and try to understand what their budget is.”
Starting in 2017, the average tuition, tuition and room and board fee for a public four-year university will be $20,770, according to the college board.
There is no tax cut to cover the full cost of childcare, but parents have some tools to help pay for it.
Pay the bills
Assuming that you can rely on the FSA for work, this is probably the most important thing for high earners, if they can save more tax in higher brackets. This is because any money entering the account will escape federal income tax.
Parents can also use credits to take care of their children and their families. Warning: you cannot use this credit line at the same cost as the FSA.
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 are exempt, and parents can use the money tax-free, as long as they pay for education.
La grange park, Illinois bright walter Financial companies (Brightwater Financial), certified public accountants and Kathy drews (Cathy Derus) head, said: “people tend to use 529 a bit cautious. “But please note that this is still a good thing.”