Last-chance tax breaks for parents and homeowners

Family sitting outside their home

(ARA) — Uncle Sam is handing out a few extra breaks to parents and homeowners on their 2011 and 2012 tax returns. Although the filing deadline is months away, some of these tax benefits require forward planning. Others may influence decisions you make now about child care, college and your home.

The easiest credit parents can claim is the Child Tax Credit, says Jessi Dolmage, spokesperson for TaxACT. "By simple virtue of being a parent, you can claim $1,000 for each eligible dependent on your 2011 and 2012 returns. Even better, you can receive cash back for the credit, as long as your earned income is over $3,000 and your tax liability is less than the credit."

Daycare can account for a big chunk of working parents' income. Fortunately, you can recoup some of those costs with the expanded Child and Dependent Care Credit in 2011 and 2012. The credit is worth between 20 and 35 percent of up to $3,000 of qualified expenses per child under the age of 13, or $6,000 for two or more children. The credit amount decreases as adjusted gross income increases.

Parents who initiate and finalize an adoption by the end of 2012 may qualify for the expanded Adoption Credit. For 2011, the credit is worth up to $13,170 and is refundable (like the Child Tax Credit). In 2012, the maximum amount changes to $12,170 and becomes non-refundable. Keep in mind the IRS requires adoption documents and Form 8839 to be mailed with your return. It takes 6 to 8 weeks for mailed returns to be processed, so select direct deposit rather than a check for the fastest refund.

College costs are higher than ever, but so are the available tax breaks. The refundable American Opportunity Credit, expanded Student Loan Interest Deduction and expanded Coverdell Education Savings Accounts contribution limit add up to $7,000 in savings on 2011 and 2012 federal returns. Plus, you can deduct up to $4,000 in tuition and fees from your 2011 income.

Dolmage also notes, "For the first time in three years, there won't be a homebuyer credit available on federal returns. However, homeowners can still save on taxes in other areas."

The Nonbusiness Energy Property Credit is worth up to $500 for insulation, exterior windows and doors, central air conditioners, water heaters and other improvements. Caps have been placed on furnaces, water boilers, windows, water heaters, air conditioners and biomass stoves. In addition, if you claimed the credit on your 2009 or 2010 returns, you must subtract the collective amount from the $500 available for 2011.

Investing in solar hot water property, geothermal heat pumps and wind property before Dec. 31, 2016, also has tax benefits. The nonrefundable Residential Energy Efficient Property Credit allows you to claim 30 percent of the expenditures, although certain improvements have caps.

Depending on your adjusted gross income, mortgage insurance premiums paid on a qualified mortgage can count toward your 2011 mortgage interest deduction.

Tax preparation software is helpful for navigating all tax situations, but especially those for parents and homeowners, reminds Dolmage. "The IRS has several requirements for each tax benefit and a very specific definition of dependents. Software guides you through the details and then calculates your maximum amount. Solutions like TaxACT also include features to help users navigate major life changes, which certainly include adoption and college."

Learn more about these and other tax breaks at www.irs.gov and www.taxact.com. Estimate your 2011 federal and state taxes for free as early as October with Preview Versions of TaxACT.

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Upcoming Tax Dates

April 10 Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.

April 10 Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the first 15 days of March.

April 14 Regular method taxes
Deposit the tax for the last 16 days of March.

April 15 Individuals
File a 2014 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040, 1040A, or 1040EZ by October 15.

April 15 Individuals
If you are not paying your 2015 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2015 estimated tax. Use Form 1040ES.

April 15 Household Employers
If you paid cash wages of $1,800 or more in 2014 to a household employee, you must file Schedule H - Details

April 15 Partnerships
File a 2014 calendar year return (Form 1065) - Details

April 15 Partnerships
Electing large partnerships: File a 2014 calendar year return (Form 1065-B) - Details

April 15 Corporations
Deposit the first installment of estimated income tax for 2015 - Details

April 15 Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 Household employers
If you paid cash wages of $1,900 or more in 2014 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2013 or 2014 to household employees. Also, report any income tax you withheld for your household employees.

April 27 Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 16 days of March.

April 29 Regular method taxes
Deposit the tax for the first 15 days of April.

April 30 Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2015. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until May 11 to file the return.

April 30 Federal unemployment tax.
Deposit the tax owed through March if more than $500.

April 30 Form 720 taxes
File Form 720 for the first quarter of 2015.

April 30 Wagering tax
File Form 730 and pay the tax on wagers accepted during March.

April 30 Heavy highway vehicle use tax
File Form 2290 and pay the tax for vehicles first used in March.

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