Families: Fight the AMT

If you have incentive stock options, don't do a thing until you get professional help. Exercising these things can catapult your tax bill into the thousands if not timed properly.

Who Takes Care of the Kids?

Besides attempting to avoid the AMT, take stock of other possible tax-saving opportunities. For one, if you have kids under age 13 and you pay someone to watch them so you and your spouse can work or go to school, you may qualify for the child and dependent care credit. You can include up to $3,000 of the expenses paid in a year for one child, or up to $6,000 for two or more kids. So keep track of those day-care or after-school-care costs.

To calculate this credit, you must apply a percentage to that expense number. Anywhere from 20% to 35% of your qualifying expenses will count, depending upon your adjusted gross income. So the minimum credit you'll get is $1,200 (20% of $6,000), while the maximum is $2,100 if you have two kids.

The credit may also be used if you paid someone to care for a spouse or a dependent of any age who is physically or mentally incapable of self-care. The same limitations apply.

Big note: If you send your kids to a summer day camp so you and your spouse can work, those costs may be included as part of your qualifying expenses. Sleep-away camp, however, doesn't count because it is considered more of a luxury than a necessity, says Bob Scharin, editor of Warren, Gorham & Lamont/RIA's Practical Tax Strategies, a monthly journal written for tax professionals.

Ah, the Money Pit

While we all love our homes, it seems we dump our entire paychecks into their upkeep. That's why it's imperative that you take advantage of the available housing deductions.