(Newswire.net — September 8, 2015) Millbury, MA — Lowering the amount of taxable income is a common tax planning strategies small business owners employ to reduce the amount of taxes to be paid. While everybody knows children are a tax deduction, not everybody takes advantage of all the dependent deductions that are available.
“Small business owners and non-small business owners alike are guilty of not extracting every deduction available to them for having children or dependents. That can range from not deducting child care to higher education credits,” said Paul Dion, owner of Paul Dion CPA.
Dion cites the following as some of the more commonly overlooked child deductions:
- Dependents: In most cases, a child can be claimed as a dependent in the year they were born.
- Child Tax Credit: You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. The Additional Child Tax Credit is a refundable credit and may give you a refund even if you do not owe any tax.
- Child and Dependent Care Credit: You may be able to claim this credit if you pay someone to care for your child under age 13 while you work or look for work. Be sure to keep track of your child care expenses so we can claim this credit accurately.
- Earned Income Tax Credit: The EITC is a benefit for certain people who work and have earned income from wages, self-employment, or farming. EITC reduces the amount of tax you owe and may also give you a refund.
- Adoption Credit: You may be able to take a tax credit for qualifying expenses paid to adopt a child.
- Coverdell Education Savings Account: This savings account is used to pay qualified expenses at an eligible educational institution. Contributions are not deductible; however, qualified distributions generally are tax-free.
- Higher Education Credits: Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar for dollar, unlike a deduction, which reduces your taxable income.
- Student Loan Interest: You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.
“One of the great benefits of being a small business owner is the number of deductions available to you. That’s why many SMBs might scrutinize their business for extra deductions rather than the ones sitting at the breakfast table in their house,” said Dion. “That may sound cold and mercenary. But every eligible taxpayer is entitled to these deductions, whether you own your own business or not. So, why not take advantage of them?”
Adds Dion, “It’s even possible to hire your children to some of those tasks around the office that aren’t a productive use of your time and then deduct what you pay your kids.”
For more information on tax planning and small business deductions, you can call Paul Dion CPA at (508) 853-3292 or visit www.pauldioncpa.com.
About Paul Dion CPA
ABOUT PAUL DION, CPA Beyond simple “bean counting”, Paul Dion, CPA and associates work side by side and speak in common English to help clients fully understand their tax situation and take proactive steps to pay the least amount of tax legally allowed while minimizing the risk of an audit. Clients save money and sleep well as night. Business services include small business accounting, payroll, cash flow management, strategic business planning, new business formation, internet controls, QuickBooks, part-time CFO, bank financing, succession planning and non-profit organization direction. For a free book, more information or a complimentary consultation, please visit www.PaulDionCPA.com or contact Paul Dion CPA, via Info@PaulDionCPA.com or (508) 853-3292. Offices are conveniently located at 22 West Street, #6, (Felter’s Mill), Millbury, MA 01527.