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Your pocketbook Taxes and Parenting - by Jason Alderson Believe it or not, there is a financial advantage to having a child. You not only gain a loved one, you also gain a depend- ency exemption you can deduct on your tax return. I n order to claim your child as a dependent, you must first apply for a social security number for your child within a year after his or her birth. That will make the baby "official" in the eyes of the IRS and that's the first step in getting your deduction. Who is a Dependent? There are five requirements that a person must meet to be your dependent. B This person must be a relative or at least have lived in your home as a family member all year. C If the person is married, he or she can't file a joint return. This proba- bly isn't a consideration for a new- born. D This person must be a United States citizen, resident alien or a resident of Canada or Mexico. E This person must have a gross income of less than $3,000, unless the person is under the age of 19 or a full time student under the age of 24. F You must have provided more than 50% of the person's total support for the tax year for which you are taking the deduction. www.practical moneyskills.com/ personalfinance Jason Alderman is a senior director at Visa Inc. and runs the company's global financial literacy initiative, which includes the award-winning Practical Money Skills for Life and What's My Score? programs. As part of his work at Visa, Mr. Alderman writes a weekly per- sonal finance column that is carried in over 500 community newspapers throughout the U.S. Tax Credits Tax credits differ from deduc- tions in that they don't just lower your taxable income, they actually directly lower the tax you owe. So a $1 tax credit will lower the tax you owe by $1. If you pay for someone to take care of your child, for example day care or a nanny, you may receive a tax credit equal to 20% to 30% (depending on your income) of qualified childcare expense, up to $2,400 for one child or $4,800 for two or more children. Be sure to keep all payment records, including receipts, for all childcare expenses. You will need them to substantiate your expenses. Nursery school, private kinder- garten, after school programs and day care are all qualifying expenses. Flexible Spending Accounts You may have a spouse whose employer offers their employees flexible spending accounts [from Employer Provided Benefits] as a benefit. These accounts allow employees to have from $2,000 to $5,000 a year deducted from their paychecks pre-tax. This money can be spent on healthcare and child- care for the family. All of these tax issues have com- plexities that are not covered here. 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Check out these featured "Buy-lights" for September: N Dell: Get employee pricing on Dell products New Balance: Save 15% Brooks Brothers: Save 15% Join the 202,000 NEA members already registered for NEA Click & Save. Go to today! More savings at www. neamb.com The NEA Auto Purchase Advantage Program saves mem- bers thousands of dollars on new and used vehicles with a no-hassle car-buying policy that guarantees low upfront pricing in writing! Not only that, but during the back-to- school period, many manufacturers offer additional incentives so deal- ers can make room for an influx of new models. Did you know NEA members save an average of $4,300 on their new car purchases? Get the details at www.neamb.com under the Everyday Living tab. Look under "Discounts" for NEA Auto Purchase Advantage! Save $20 on a Four-Day Vehicle Rental from Alamo! NEA Members already receive preferred pricing when they rent from Alamo, but this deal is even sweeter! Reserve a car, minivan or SUV in the U.S., Latin America or Caribbean for at least four days with a Saturday overnight keep and get an additional $20 off. It's never too early to make your Thanksgiving and holiday plans. Visit www.neamb.com and click on the Travel & Leisure tab. You'll find Alamo under the "Discounts" section. When you make your reser- vation, be sure to request Contract ID#: 7014162 and Coupon Code: AD7929SDN. EA Click & Save, the online discount buying service for NEA members, highlights 20 September 2011 DSEA ACTION! www.dsea.org clickandsave www.neamb.com/ www.MyNEALife.com loungemakeover.com www.neamb.com/backtoschool www. school-