3 things parents should know before doing taxes in 2019
INDIANAPOLIS (WISH) — If you have children, the new tax law has some changes you need to pay attention to.
From education costs to changes to past exemptions, here’s what you need to know.
Parents — it’s time to go back to school. Take out that pen and paper, we have some notes for you on changes to how your children can impact your taxes.
The child tax credit has doubled
The child tax credit doubles from $1,000 to $2,000.
This comes off the bottom line of your income tax bill, so you save in total $2,000 for each kid.
Just as long as your family income is less than $400,000.
No more personal exemptions
If you’ve used personal exemptions, look no further. It is no more this year.
You may remember that it was $4,000 per family member.
Whether it means you are spending less money on taxes depends.
“The question will be will the lower tax rates combined with some of the other provisions in the tax code be enough for them to recoup the $4,000 in lost deductions,” asked Chad Halstead, a partner at Katz, Sapper & Miller, a CPA and tax firm in Indianapolis.
529 plans expand
The new tax law also expands 529 plans.
These plans allow you to save money tax-free for your education.
It used to be just for college.
Now it is for private elementary and high school too.
Studies have shown about 60 percent of Americans don’t know about 529 plans.
David Winters says the change should not affect too many people because people going to private school tend to not need a funding plan.
“It could have maybe brought more people to the table of what is a 529 and so that from that purpose not necessarily from, ‘Oh, I have a kid in private school I want to do this now,’” Winters said.
Last year, college planning experts explained to us that these plans are important for families to consider.
You can get up to $1,000 back per year on your income taxes for putting money into the fund.
It is an investment, so it could go up or down. Experts say they tend to be lower risk options, like a 401k.