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episode 37: the world’s cutest tax deduction
Attention parents! Nobody ever said raising children was easy … or cheap, which is why the IRS provides a variety of tax breaks for families to help ease the financial burden. Ashley Matthews, mother of three and a tax manager at Rea & Associates, has some insight you are going to want to hear.
On episode 37, The World’s Cutest Tax Deduction, Ashley joins Mark Van Benschoten, to discuss the various forms of tax relief available to parents, particularly when it comes to putting money aside to offset the cost of higher education. For example, if you claim the American Opportunity Credit and the Lifetime Learning Credit on your taxes, you can receive a break on your out-of-pocket expenses – not to mention the deductions you can receive to help pay for tuition and fees. Additionally, Ashley explains that financial aid and scholarships are always 100 percent tax free – so don’t fear the tax man when you learn that your son or daughter just received that full ride you’ve been working toward since their infancy. Then, of course, we couldn’t talk about college savings strategies without bringing up the popular College Savings Plans or the 529 Plan, which gives parents and others the opportunity to save the funds today to receive tax-free growth of those funds over the course of 10-15 years (for example). It’s also important to note that most of these tax incentives are applicable to those seeking post-secondary education, trade and technical training or a professional degree.
If you are struggling to hold down a full-time job while raising young children, you will be happy to learn that incorporating a Dependent Care Account into your financial strategy, can give you a little relief as well. This type of account allows married couples and single parents the opportunity to set aside $5,000 and $2,000 respectively, per household, per year, pre-tax. Additionally, Ashley explains, Dependent Care Expenses provide you with a dollar-for-dollar qualified credit on your tax return!
A word of caution. … Navigating an optimized educational tax savings strategy can be difficult due to its complex nature. Therefore, it’s advantageous to consult with a tax expert on the matter to best weigh options that can help you optimize your family’s short- and long-term tax strategies.
articles & insight
Three College Savings Account Tips You Can’t Afford To Ignore – You have scrimped and saved over the years to fund your child’s Coverdell Education Savings Account and/or qualified tuition program (529 plan), but it looks like you still won’t have enough saved in time to finance the entire cost of a college education. What do you do? Read on to find out.
Intro To College Costs 101 – Let’s face it. College costs are on the rise. And if you plan to pay for your children’s college education, knowing and planning how you will pay for it is as important as planning for retirement. The average cost to attend a public university in Ohio exceeds $20,000 per year, while individuals attending private colleges can expect to pay over $40,000 per year. Read on to find out how you can ease the burden of increasing higher education costs.
College Costs Keeping You Up All Night? Tax Credits Could Offer Relief – College is not cheap, and according to the National Center for Educational Statistics (NCES), it’s only getting more costly. The NCES reported that the prices for an undergraduate to attend college at a public institution rose 40 percent between the 2001-02 and 2011-12 academic years; a student who chose to attend a private nonprofit institution saw a 28 percent increase over the same period. The report found that an average undergraduate student paid $14,300 annually for their tuition, room and board at a public institution while a student attending a private for-profit school paid $23,300 per year. And those numbers don’t include the price of books, meals, transportation, insurance, and extracurricular activities … to name a few. Read on to find out how to offset these crippling costs.
Getting A Handle On The High Costs of Higher Education – As you send your children off to college and pay the bills for their tuition, fees and other expenses, do you know what type of educational benefits are available at the federal level to help with these costs? Read on and find out.
School’s Out For Summer, But Tax Credits Are Still In – Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit. Keep reading for 8 tips to help you claim the child care tax credit.
From Toddler To Teen And Beyond: Tax Breaks For Families – With parenthood comes many rewarding experiences – and expenses. You hear about how expensive it is to raise a child, but you never really know what to expect until that little bundle of joy enters your life. Read on to find out what tax breaks are available for families.
Click here to read the official transcript for episode 37: the world’s cutest tax deduction.