The government doubled a tax credit

Child care tax credit doubles

Donald Trump is approaching his 2-year anniversary as our nation’s 45^th president. Love him or hate him, he has promoted and signed a tax law with several benefits. I am talking about the child care tax credit here, with information from https://smartasset.com/taxes/heres-how-the-trump-tax-plan-could-affect-you. Trump raised the child care tax credit from $1,000 in tax year 2017 to $2,000 in tax year 2018.

Credits are better

I’m sure you noticed I wrote “credit” and not “deduction.” That works to your benefit. A credit is a dollar-for-dollar reduction in your return. Suppose you are proofreading your return from tax year 2017 with Dave Fechter, CPA. He may report “I have good news for you. With all other factors being equal, your refund this year will be $1,000 more because the credit is higher.” Conversely, a $1,000 deduction would merely reduce your taxable income then you multiply that by your tax rate to see how much that deduction benefits you. I’m sure you’ll agree, credits are better.

What to do with that money

Now that you have an extra $1,000 when you get your tax refund, let’s determine what you can do with it. These investments are exclusively for your child.

Credits are better than deductions. You get more bang for the buck with credits. Since we’re talking about child care tax credits here, invest that money back into your kids. The child care credit is one benefit an experienced CPA can find for you. Dave Fechter, CPA has been in this business for over 30 years. Let him put his expertise to work for you. Call Dave Fechter, CPA at (916) 984-2081 today.