5 tax break opportunities to maximize savings in 2024

As this year’s tax filing season approaches, understanding tax deductions and leveraging tax benefits can significantly help individuals save money for specific purposes. The government offers various tax breaks to citizens, which are categorized based on different factors to offer a valuable opportunity for financial relief. To make the most of these tax benefits, individuals must be aware of the tax breaks that are available during the ongoing financial year.

Child and Dependent Care Credit

The Child and Dependent Care Credit (CDCC) covers a specific portion of daycare and other costs for children under 13. It also partially covers the expenses incurred for a parent, spouse, or any other dependent who cannot care for oneself. Usually, the coverage is applicable for 35% of $3,000 of expenses incurred in caring for one dependent and $6,000 if two or more dependents are involved.

Lifetime learning credit

The lifetime learning credit enables one to claim 20% of the first installment of $10,000 one pays for their fees and tuition. The maximum amount that may be claimed through this initiative is $2,000. Other expenses, such as conveyance and accommodation, are not included.

Child tax credit

The child tax credit allows parents to claim up to $2,000 for each child, with $1,700 of this amount being potentially refundable. The condition is that the child must be below 17 years of age. Certain other income requirements also determine one’s eligibility for this benefit.

American Opportunity Tax Credit

This tax credit allows one to claim the first installment of $2,000 spent on school fees, tuition, books, and equipment, as well as 25% of the next $2,000, for a total amount of $2,500.

Adoption credit

This non-refundable tax break covers a certain amount of qualified adoption expenses for each adopted child. The amount progressively decreases when the taxpayer reaches a certain income level and eventually no longer applies when the individual’s modified adjusted gross income exceeds the specified limit during the particular financial year.