Tax Day isn’t too far off, which means you might qualify for higher tax savings. If you’re a parent, there are plenty of tax tricks you can use to save hundreds or even thousands of dollars.
But many parents fail to take advantage, missing out on a no-risk opportunity. MarketWatch shows you how to avoid it:
Parents could save more than $2,000 a year on child-care costs, but more than half leave the money on the table.
While most parents (67 percent) know they could save on child-care costs with a tax break called the dependent care flexible spending account, only 44 percent actually use one, according to a survey of 1,100 parents by Care.com, an online referral service that matches families with caregivers. “It’s a big missed opportunity that we want to shed some light on,” said Kerri Swope, vice president of Care.com HomePay, which provides household payroll services.
Flexible spending accounts (FSAs) are offered as part of an employee benefits package at many companies. Parents can put up to $5,000 of pre-tax earnings into the account per year and use it to pay for daycare, nannies, and care for other dependents, like aging parents. Depending on your marginal tax rate, you can save up to $2,300 a year.
That’s a lot of money! So get out there and take advantage.