Mid-Year Tax Planning For Those Miscellaneous Items
BOSTON (CBS) - Summer Time Childcare Expenses
Many parents who work or who are looking for work must arrange for care of their children during the school vacation.
The Child and Dependent Care Credit is available for expenses incurred during the lazy days of summer as well as throughout the rest of the year.
- The cost of day camp can count as an expense towards the child and dependent care credit.
- Expenses for overnight camps do not qualify.
- A sitter in your home qualifies.
- The actual credit can be up to 35% of your qualifying expenses, depending upon your income.
- You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
This credit can also be claimed for a spouse or a dependent age 13 or over who is not able to care for themselves, check out publication 503, which is available on the IRS website.
Adoption
For 2012, the maximum adoption credit will be $12,650, down from over $13,000 last year. The amount of the credit begins to phase out for taxpayers with modified AGI in excess of $189,710 and is completely phased out for taxpayers with modified AGI of $229,710.
Where Is Your 2%?
So over the last seven months have you saved that extra 2% the government has not taken out of your paycheck or have you spent it in drips and drabs? Currently you are only paying 4.2% instead of the 6.2% into Social Security for this year. If you are earning $50,000 that 2% amounts to $1000. Consider increasing your retirement plan contributions by 2%. I doubt very much if Congress will again give us a gift of 2%.
Long-term Capital Gains And Dividends
The long-term capital gains rate for 2012 is 15% and is part of the Bush Tax package that will expire this year. The tax is scheduled to increase to the maximum 20% in 2013. You may want to consider selling in 2012 to take advantage of the lower rate. Congress in all of its wisdom may change the lax laws again in December. So stay tuned for the rest of the story.
Dividends, same thing. The 15% rate expires this year. And dividends then will be taxed as ordinary income. The top bracket for 2013 is scheduled to be 39.6%. But again with taxes nothing is cast in concrete!
One more thing: Check out the article in Business West on mid-year tax planning.
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You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
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