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(continued from 10 tax mistakes parents often make (part 1))

5.     Claiming something other than head of household status.

This thing provides certain tax advantages, including the ability to claim dependents. There’s a lot of confusion about the head of household filing status and a lot of people don’t seem to understand what that means. Single parents could be eligible for this status if they paid more than half the cost of maintaining their household throughout the year and live with their children for more than half the year.

 6.     Ignoring the child tax credit.

The child tax credit , which is worth up to $ 1,000, phases out for higher earners but most taxpayers qualify for it. It applies the children under age 17who live with their parent claiming the credit for more than half the year.

7.     Not filing taxes for older child with a part-time job.

Parents forget that an older child might have a tax filing requirement, even if that child is still a dependent. And failing to file that older child’s taxes could mean losing out on a refund. To get that money back, parents have to file a return.

8.     Failing to take advantage of tax-advantaged savings plans.

Most adults have never heard of 529 college savings accounts which allow parents to invest after-tax money and grow it tax-free as long as they use it to pay for tuition. Coverdell education savings accounts, which come with strict contributin limits of $ 2,000 a year, as well as income limits also offer tax advantages. Similarly, many parents forget to put pre-tax money aside.

9.     Skipping education write-off.

From the American opportunity credit to the lifetime learning credit, there are many tax benefits that help alleviate some of the cost of paying for collage, even if the college student is the one paying the loan interest. Many parents don’t realize that a number of states allow deductions for contributions to college savings plans. In New York, residents can write off $ 5,000 for single filers and $ 10,000 for married joint filters. It is best if you check www.savingforcollege.com to see if you qualify.

10.   Repeating classic errors that all taxpayers make.

The most common errors include forgetting to sign returns, just one spouse signing it forgetting to attach a W-2 form, ailing to use enough postage, and writing the name and the address on the mailing envelope illegibly. Take advantage of computer technology, and most of those mistakes go away.

Between sleep deprivation and hectic schedules, parents don’t always have time to decipher the tax code. A lot of moms and dads lose out of potential savings in the form of tax credits, deductions, and tax-advantaged savings plans. Here are the first three on the top ten list of tax ten mistakes parents often make.

1.     Failing to quickly get a social security number for a new child. 

Mark Luscombe, principal federal tax analyst for the tax firm CCH, says that even newborns need a social security numbers right away, but parents are still responsible for making sure they get the number and use it correctly when filing the taxes. Otherways, Luscombe says that the IRS could disallow some of the tax benefits. Luscombe adds that parents themselves need to make sure that they have their correct social security number on their tax forms. This can be especially challenging for people who recently got married, changed their names and requested a new number. If the name on the tax return and the social security tax number don’t match up, the IRS get concerned.

2.      Omitting the dependent exemption for babies born at the end of the year

Even babies born on December 31 provide their parents an entire year’s worth of exemption status. Barbara Weltman, attorney and author of J.K.Lasser’s 1001 deductionsand tax breaks 2011, says that people don’t have to apportion it to the time the baby was alive.  She adds that even  high-income taxpayers get the full value of the exemption this year.

3.      Overlookine the adoption credit.

This credit, which can be worth about $ 13,000, is designed to alleviate some of the expenses associated with adopting a child. But because adoption often takes more than one year and involves many types of expenses, parents can get overwhelmed with the paperwork. Bob Meighan, vice president of turbotax, recommends keeping careful track of receipts, then filing for the credit the year of the adoption.

4.      Forgetting to keep careful records of care providers.

Many working parents are eligible for the child and dependent tax credit which can help ease some of the costs of daycare, babysitters, and after-school programs for children younger than 13. Mark Luscombe, principal federal tax analyst for the tax firm CCH, says that what often trips parents up, is that they forget to record the tax ID or social security numbers of the care providers throughout the year. Without that information, they can’t file for the tax credit. If parents had a succession of babysitters and have no social security numbers then you could lose out on part of the credit for not doing your homework. Stacey Bredford, author of the wall street journal’s financial guidebook for new parents adds that summer day camp fees also count if both parents are working, looking for work, or studying, as long as the child is under age 13.

(continued to 10 tax mistakes parents often make (part 2))