Editor’s note: This post is brought to you by INB’s tax services in conjunction with Dave Ramsey, a personal money-management expert and popular national radio personality. INB Senior Vice President Chris Parks, CPA, is the Dave Ramsey-endorsed local provider for tax services in the Springfield area. Schedule an appointment today with Chris by calling 217-679-1676.

tax timeIf you’re overwhelmed parent doubly overwhelmed by what you need to know about the 2018 tax reform bill (formally known as the “Tax Cuts and Jobs Act”), we’ve got you covered at INB. Here are some of the tax reform differences you need to know if you have kids…

Child Tax Credit Changes

Good news: your children are finally paying off! (We kid, we kid – they’re always worth it, aren’t they?)

In 2017, if parents made less than $110,000 jointly and $75,000 individually, they received a $1,000 child tax credit for qualified children under the age of 17. The 2018 tax reform bill increases that credit to $2,000 per qualified child and raises the income limits for the credit to $400,000 jointly and $200,000 individually. This change means a lot more people will be able to receive tax credits for their kids.

More Changes for Taxpayers with Kids

If you have children, you may have a 529 college savings plan in place. Money you put in the account grows tax-free, but until now, it could only be used for qualifying college expenses. The new tax reform bill changes that.

Now, if you have a 529 savings plan for your child, you can use it for education other than college.

For example, if you have children in private school or if you pay for tutoring for your child in kindergarten through twelfth grade, you can use money from your 529 for these expenses tax-free.

While it may seem like a benefit to use a 529 plan prior to college, we recommend discussing this with your experienced financial adviser first - especially if you want to use the 529 plan sooner than you originally intended. Because don’t forget: withdrawing too much money before your child goes to college can cancel out the power of compound growth.

To see a breakdown of other tax changes, read more on our blog here and here.

If you’re looking for a trustworthy tax expert in your area, schedule an appointment with INB’s Chris Parks, CPA, by calling 217-679-1676.