Being a parent comes with a lot of responsibilities—and a lot of expenses. Whether you’re paying for daycare so you can work or saving for your child’s education, these costs can add up quickly. The good news is that the IRS offers tax credits and deductions that can help reduce your overall tax bill.

But many parents don’t realize which expenses qualify or how to properly claim them. That’s where working with an experienced accounting consultant can make a big difference. If you’re a parent looking for ways to save on your taxes, this guide will walk you through the most common childcare and education tax benefits available.

Claiming Childcare Expenses

If you pay someone to watch your child while you work or look for work, you may qualify for the Child and Dependent Care Credit. This credit is designed to help working parents offset the high cost of childcare.

Who Qualifies?

To be eligible for the Child and Dependent Care Credit:

You (and your spouse, if filing jointly) must have earned income. The care must be for a child under the age of 13. The care provider cannot be your spouse, the child’s parent, or a sibling under the age of 19.

This credit applies whether your child attends a daycare center, after-school program, summer camp, or is watched by a babysitter or nanny (as long as they meet IRS requirements).

How Much Can You Claim?

You may be able to claim up to:

$3,000 of childcare expenses for one child. $6,000 for two or more children.

Depending on your income level, you can receive a credit worth between 20% and 35% of these expenses. That means if you spend $6,000 on qualifying childcare for two children, you could receive a tax credit of up to $2,100.

This is a nonrefundable credit, which means it can reduce your tax bill to zero but won’t result in a refund beyond what you owe.

Understanding Education-Related Tax Benefits

While childcare costs are more common in the early years, education expenses start to grow as children enter school and continue through college. Some of these expenses may also qualify for tax savings.

1. 529 College Savings Plans

One of the most effective ways to save for your child’s education is by contributing to a 529 plan. These state-sponsored investment accounts offer tax advantages that make saving easier.

Contributions to a 529 plan aren’t deductible on your federal taxes, but South Carolina allows a state income tax deduction for any amount you contribute. Earnings grow tax-free, and you won’t pay federal taxes when you use the money for qualified education expenses such as tuition, books, fees, and even room and board.

In some cases, 529 plans can also be used for K-12 private school tuition, though the rules vary by state.

2. American Opportunity Tax Credit (AOTC)

If you have a child attending college, the AOTC can help reduce your tax burden significantly. This credit is:

Worth up to $2,500 per student per year. Available for the first four years of higher education. Based on qualifying education expenses like tuition, fees, and required course materials.

To receive the full credit, your income must fall below certain limits. The AOTC is partially refundable, which means you could receive up to $1,000 back even if you don’t owe taxes.

3. Lifetime Learning Credit (LLC)

This credit is available to parents paying for continued education, graduate school, or professional development.

Worth up to $2,000 per return (not per student). Can be used for both undergraduate and graduate courses, or job-related training. There’s no limit on the number of years you can claim this credit.

The Lifetime Learning Credit is nonrefundable, but it can still help reduce your tax bill if you qualify.

Other Tax Tips for Parents Keep Detailed Records

Always keep receipts, statements, and documentation of any childcare or education expenses. For the Child and Dependent Care Credit, you’ll need the provider’s full name, address, and their Taxpayer Identification Number (TIN) or Social Security number.

For education expenses, keep records of tuition payments, enrollment dates, and required books or materials. These documents will be helpful if you’re audited or need to verify eligibility for any credits.

Adjust Your W-4

If your financial situation has changed—for example, if you started paying for childcare or your child started college—you may want to update your W-4 form at work. This can help ensure the correct amount of tax is withheld from your paycheck throughout the year, which can help avoid surprises at tax time.

Consult with a Trusted Accounting Consultant

Tax laws can change from year to year, and everyone’s financial situation is different. That’s why speaking with a knowledgeable accounting consultant can be so valuable. A professional can:

Help you understand what tax credits you qualify for. Ensure you’re not missing out on deductions. Provide year-round planning advice so you’re better prepared each tax season.

Professionals like the team at Carolina Tax Consulting, LLC specialize in helping families navigate these kinds of tax decisions. Their local expertise and personalized approach make them a great resource for parents in South Carolina.

Conclusion

From daycare and summer camps to college tuition and educational supplies, raising children involves many financial choices. Fortunately, the tax system offers a variety of credits and savings opportunities to help parents manage these expenses.

By keeping good records, staying informed about available tax breaks, and working with an experienced accounting consultant, parents can make smarter decisions and possibly save hundreds—or even thousands—of dollars at tax time.

If you have questions or want personalized guidance, don’t wait until tax season. Reach out to a trusted accounting consultant today and take control of your financial future as a parent.