Raising a family can be an expensive endeavor. According to the United States Department of Agriculture, it costs $300,000 to bring up a child for 17 years, and this figure does not include college tuition. Some of the expenses of raising a family can be deducted from your federal income tax payments. There are also family-related expenses that are not tax-deductible or that are tax-deductible only in certain circumstances.
Is Monthly Rent Tax-Deductible?
If you're just renting your house or apartment as a place to live, you can't deduct any part of your rent on your federal tax return. You can only take a deduction for part of your rent if you're using part of your home to run a business. The deduction applies if you're using your home as your main place of business and you're not using your business space as living space. You're also entitled to the deduction if you run a state-licensed daycare center at home, even if you use living space for your daycare.
Does Renting a Room in Your House Need to Be Listed as Income for Taxes?
Renting out a spare room in your house can help you make ends meet, but don't forget to list the income you earn on your tax return. All rental income is taxable, but you can deduct expenses related to renting and maintaining the room you rent out. Some deductible expenses include advertising for tenants, cleaning, exterminator fees, maintenance, repairs, supplies and even depreciation for the room as well as any furniture you rent with it. However, you can only deduct expenses related to the part of the home that you rent out.
Can Cell Phones Be Tax-Deductible?
You can deduct any expenses you incur when you use your cell phone for your own business. If you need to use your personal cell phone on the job and your employer does not pay you back for its use, you can deduct job-related cell phone expenses that exceed 2 percent of your income. Whether you work for yourself or for someone else, you can only count actual work-related calls and the percentage of fixed fees that equals the percentage of your work use of the phone toward your deduction.
Can a New Cell Phone Be Claimed as a Tax Credit?
You can't deduct the cost of a new cell phone or take any deduction related to a cell phone if you are just using it for yourself. You may be able to claim depreciation for your cell phone, but this only applies if you're using a cell phone at least partially for work. The amount you can deduct is based on the percentage of time that you use it for your work or business.
Can a Police Officer Claim Their Cell Phone on Their Taxes?
A police officer is the same as any other employee when it comes to tax deductions. If a police officer uses his personal cell phone to make or receive work calls, he can deduct the percentage of expenses that match the percentage of time he uses it for work. He can also deduct the cost of any calls he makes for his work. All of these deductions are only valid if his cellphone costs exceed 2 percent of his income.
Can You Write Off Lunch Money for Your Kids?
There's no such thing as a free lunch, and as far as your kids are concerned, there's no such thing as a tax-deductible lunch either. The only lunch expenses you can deduct from your taxes are your own business-lunch expenses. However, if you're a low-income parent, your children may qualify for free or subsidized school lunches under a United States Department of Agriculture (USDA) program.
How Much Money Can You Give Your Kids Without Being Taxed?
As of 2009, you and your spouse can each give up to $13,000 to each of your kids before you are liable for the federal gift tax. That means each kid can receive a total of $26,000 from both of their parents combined. Your kids can use the gift for anything they want, and you don't get any tax deductions for your gifts. The gift tax limit is the same regardless of whether your kids are still your dependents, and the limit per gift is the same even if you give a gift to your parents, your nieces, or someone you're not related to.
How Much Money Do Your Kids Have to Make Before You Need Their W-2?
If your kids earned $5,700 through actual work in 2011, they must file tax returns. You'll need their W-2s so you or your accountants can prepare their tax returns. You'll also need their W-2s if their work income and unearned income, plus $300, came to more than $950. For example, if you have a son who earned $300 after school working in a kennel, and he also earned $500 in dividends from investing part of his allowance over the years, you'll need a W-2 for that $300 because $500+$300+$300 equals $1100, which is greater than $950. If he earned $100 at the kennel and $500 as a budding Warren Buffett, he's off the hook, but if he earned $700 at work and $300 in dividends, he must file a return.
Can You Claim Money You Gave to Your Kids for College as Deductions?
You can claim money you paid to your kid's college as a deduction so long as your kid remains a dependent on your tax return. You can't deduct money you gave to your kids for college expenses like books, computer software and activity fees.
Whenever you have a question about deducting family living expenses, contact a certified public accountant (CPA) or tax attorney. They'll be able to help you take advantage of provisions in the tax code that help you get a bit of a break for the rising costs of raising your family.
- WSJ Blogs: Real Time Economics: Cost to Raise a Child: Around $300,000, Not Including College
- IRS.gov: Work From Home? Consider the Home Office Deduction
- Internal Revenue Service: Publication 17: Section 9: Rental Income and Expenses: Renting Part of Property
- New Jersey Society of CPAs: CPA Observation Post: Taxpayer Beware: IRS Taking Tax Deductions for Cell Phone Use Seriously
- IRS.gov: Publication 529 - Main Content
- Kiplinger.com: Which Child-Care Expenses Are Deductible?
- USDA Food and Nutrition Service: National School Lunch Program
- AXA Equitable: Give A Gift With Meaning And Worth
- IRS.gov: Frequently Asked Questions on Gift Taxes
- MoneyCrashers: Filing Taxes for Kids: Does My Child Have to File a Tax Return?
John DeMerceau is an American expatriate entrepreneur, marketing analyst and Web developer. He now lives and works in southeast Asia, where he creates websites and branding/marketing reports for international clients. DeMerceau graduated from Columbia University with a Bachelor of Arts in history.