20 Tax Deductions for Stay-at-Home Parents
Stay-at-home parents may not earn a paycheck but can still cash in on valuable tax deductions and credits that keep more money in their pockets!
- Alyana Aguja
- 6 min read
Stay-at-home parenting has secret financial benefits, such as credits and tax deductions that can save you a bundle. From home office deductions to child tax credits, there are many means of reducing your taxable income and preserving money in your household’s budget. If you’re operating a side business, investing in your child’s education, or dealing with medical bills, these savvy tax strategies can make every day expenses count as savings!
1. Child Tax Credit (CTC)
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The Child Tax Credit permits parents to claim as much as $2,000 for each qualifying child under 17. Even if you have no or very little taxable income, you can still receive up to $1,600 per child in the form of a refundable credit. This credit reduces the cost of having children and is a significant tax advantage for families.
2. Earned Income Tax Credit (EITC)
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Even if the one parent works at home, the working partner might be eligible for the Earned Income Tax Credit. The credit is intended for low to moderate-income families and can be as much as $7,430, depending on income and the number of children. Even if you owe no taxes, you might get a refund.
3. Dependent Care Credit
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If you pay for childcare so that you can work, seek work, or attend school, you can qualify for this credit. It pays up to 35% of $3,000 for one child or $6,000 for two or more, reducing your tax bill substantially. Unlike a deduction, this credit directly reduces the tax you owe.
4. Adoption Tax Credit
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If you have a child you adopted, you might be eligible for a credit of as much as $15,950 per child in 2023 for adoption expenses. These are expenses for legal fees, court costs, and travel. If your employer provides adoption assistance, that could also be exempt from tax.
5. Health Savings Account (HSA) Contributions
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If your household has a high-deductible medical plan, HSA contributions are tax-deductible. You can save up to $7,750 (family limit for 2024), and withdrawals for qualified medical expenses are tax-free. This is an excellent means of saving for medical care while lowering taxable income.
6. 529 College Savings Plan Deductions
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State tax deductions or credits may be available for contributions to a 529 plan, depending on your residence. These funds compound tax-free if you use them for qualified higher education expenses, K-12 tuition, and college expenses. As a stay-at-home parent, even putting in small sums can amount to significant savings over the years.
7. Self-Employment Deductions
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If you are self-employed, have a side business, or sell things online, you can claim business expenses. Home office expenses, internet, advertising, and supplies are all deductible. Even side hustles and part-time jobs qualify.
8. Home Office Deduction
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If you have a dedicated workspace in your home, you can deduct related expenses. These include a share of rent or mortgage, utilities, and internet charges. The IRS provides a simplified method of $5 per square foot (maximum 300 square feet).
9. Internet and Phone Deductions
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If you’re using your phone or internet for a home business or side hustle, you can write off some of the expenses. Even if you work a very limited amount of time, the percentage of use for work can be deducted. Tracking your work-related calls and data will allow you to make the most of this deduction.
10. Mileage and Travel Expenses
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If you use your car for a side business (such as delivering merchandise or picking up clients), you can claim mileage. The IRS permits a standard mileage deduction of 67 cents per mile 2024. Gas, tolls, parking, and maintenance on your car may be deducted if used for business purposes.
11. Education and Training Expenses
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Taking classes to enhance your abilities for a future career or enterprise? The Lifetime Learning Credit pays 20% of qualified education costs, up to $2,500 per return. Textbooks, supplies, and even courses via the Internet might be eligible.
12. Contributions to Spousal IRAs
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Even if you have no income, your working spouse can make an IRA contribution for you. The 2024 contribution limit is $7,000 ($8,000 if you’re 50 and older), and it’s tax-deductible if you fall within income limits. It lets you accumulate retirement savings even if you’re a homemaker.
13. Medical and Dental Expense Deduction
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If your medical bills are more than 7.5% of your adjusted gross income, you can deduct the difference. That includes doctor appointments, prescriptions, dental procedures, and even some over-the-counter drugs. Save receipts to make the most of this deduction.
14. Charitable Contributions
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Contributions to legitimate charities are tax deductible if you itemize your return. This applies to contributions made in cash, household goods, and even miles driven while volunteering. If you contribute items, make a record of their fair market value.
15. Student Loan Interest Deduction
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If you or your husband are paying for student loans, you may deduct as much as $2,500 in annual interest. You don’t have to itemize to take this deduction. Even if you’re a stay-at-home parent, this can lower taxable income if you’re contributing to loan repayment.
16. Energy-Efficient Home Improvements
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Upgrading your home with energy-efficient appliances, windows, or solar panels may qualify for tax credits. The Energy Efficient Home Improvement Credit can cover up to 30% of the costs. This helps lower your energy bills while saving on taxes.
17. Casualty and Theft Losses
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If you have suffered property loss due to natural disasters, you can deduct uninsured losses. This applies only if the loss is more than 10% of your adjusted gross income. This deduction is particularly beneficial for families living where hurricanes, wildfires, or floods are common.
18. Depreciation on Rental Property
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If your family owns a rental property, depreciation can be deducted over time. This reduces taxable income while maintaining rental income benefits. Even if you’re a stay-at-home parent, managing rental property can create tax savings.
19. Flexible Spending Account (FSA) Contributions
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If your spouse’s company provides an FSA, medical and dependent care costs are covered by tax-free contributions. The 2024 healthcare FSA and dependent care FSA limits are $3,200 and $5,000, respectively. This minimizes taxable income but pays for needed expenses.
20. Moving Expenses for Military Families
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If your spouse is in active military duty and you move due to a military transfer, you may deduct moving expenses. This would cover travel, lodging, and storage fees. The deduction applies even if you do not itemize.