view transcript

Let's talk about the kids a little bit. How do we maximize the kids? I have three of them. Sadly, one of them is too old to get me anything back on my tax return, but what do we do? We still have this $2,000 child tax credit now, so that's huge. What else can we do with our kids?

Lisa: Yeah, and the ones that you said are too old, because I'm in that same situation. I have two that are too old for the child tax credit, but you can get the new credit of $500 per dependent that doesn't qualify as a child anymore, so that's under 17. You can still get the $500 credit. That credit is also good for any relatives that you support or even a friend or a boyfriend or girlfriend, if you've been supporting them and they meet the dependency rules.

Tracy: Oh, I didn't even realized that when you said that earlier. The 500 goes to my now 18 year old?

Lisa: Yes. Yes.

Tracy: Now, I love him again. Now, I get something back for the kid. God bless him. We didn't talk about the earned income tax credit much actually. That was increased as well, right?

Lisa: Yes, so that increases every year. There's like an inflation adjustment for earned income tax credit, and that is a huge credit that a lot of people do miss. The IRS reports that one out of five tax payers that are eligible actually miss that credit, and if you're a family with three kids, that credit can be up to $6,431, so that's huge.

Tracy: It's huge. Everyone should pay attention to that. The other thing is child care. I know many of us ... I don't have it anymore, but when they're little you think you're working, your whole paycheck just goes to child care. That's up too, isn't it?

Lisa: Yes, so the child care credit, that is up to $1,050 for one child and up to $2100 for two or more kids. You definitely want to look into getting that, if you're paying for child care.

Tracy: You definitely do, and make sure you get the tax identification numbers of the facilities that your kids are at. Even like summer camp counts, right? If you need to sendthem to go to work, include all that stuff.

Lisa: Right. I was gonna bring that up. Summer camp, even sports camp, if you're dropping them off so you can work, that definitely counts.

Tracy: It better count. That stuff is so expensive. I'm telling you some days ... there were years where I thought I only worked to entertain my kids. All right, let's get back to our older ones right now. College. The lifetime learning credit and the American Opportunity credit, those are all still intact.

Lisa: Those are still available. The American Opportunity tax credit is $2500 per dependent, and that's for the first four years of college. The Lifetime Learning credit, now that's available even if you're not working on a four year degree. It's a $2,000 credit per tax return. That one is even good for the tax payers. If you want to take a class just to improve your skills, get that promotion you wanted to get, you can take one class and possibly get that $2000 credit.

Tracy: Does that $2,000 apply to automotive schools, training schools like that as well? If a child decides he's not going the college route?

Lisa: It can be vocational schools for the Lifetime Learning credit.

Tracy: Right. Great. That 2500 for student loan interest still intact?

Lisa: That is still intact and I know a lot of people have those student loans, so you want to make sure that you look into that.

Tracy: This is gonna sound crazy but you and I have kids who are in sports and have been in sports all these years. All those showcases we paid for over the years to get our kids in front of college coaches and things like that, can any of that be included or am I just reaching here?

Lisa: Unfortunately not. The part of sports that could be, fundraisers or charitable opportunities that you paid for, those could be deductible as charitable contributions

Parents, listen up. 

The new Tax Reform Law, passed in December 2018, is going to mean some changes when you file this year.  Don't panic, just yet. 

We are going to help you with our Exclusive free tax webinar:The Ultimate Guide to Navigating Tax Reform: Watch Our Free Webinar.

TheStreet partnered with TurboTax, the nation's premiere tax expert, for an hour long conversation. Our Tracy Byrnes was joined by TurboTax Expert  Lisa Greene-Lewis.

Among other things, they discussed what changes are in store for families. The big change centers around the child tax credits and deductions. 

Tax Credit Changes:

  • The credit increases from $1,000 to $2,000, if your child is 17 years old or younger
  • The income levels when the credit phases out are $400,000 for joint filers
  • That level is $200,000 for others
  • Dependents who are not your child receive a $500 tax credit (a social security number is required to receive this credit)

According to Greene-Lewis, this new dependent credit can be applied for someone who doesn't qualify as a child. It can also be used for any relatives that you support or even a friend or a boy/girlfriend. That is, 'if' you are supporting them and it meets the dependency rules.

Related. Tax Reform, Basics and Beyond - Watch our Free Turbo Tax Webinar

Related. 5 Key Tax Reform Changes You Need to Know