Tax Benefits for Parents: How to Save Money on Your Taxes if You Have Kids
Filing your income tax returns (ITR) is tough work. Many tax benefits are available by the government for the parents. These benefits can help you to save money. Let us know about the different tax benefits that you and your spouse can use if you have children.
1. Expenses of Education
Under Section 80C of the Income Tax Act, you can get a deduction for tuition fees you pay for your children’s education. This includes fees for full-time education at any school, college Or university in India. You can claim up to Rs 1.5 lakh per year under this section.
2. Education Loans Interest
You can get a deduction on the interest you pay under Section 80E if you have taken a loan for your children’s education. You will be able to enjoy this benefit for up to eight years or until interest is fully paid, whichever is earlier. You can claim the amount as per your wish there is no limit on claiming the amount. This will be helpful for the costs of higher education.
3. Sukanya Samriddhi Yojana (SSY) Investment
Contributions to SSY for a girl child are deductible under Section 80C, and the interest and withdrawals are tax-free.
4. Expenses for Disabled Child
If you have a child with a disability you can get a deduction under Section 80DD. This section allows you to claim expenses for medical treatment and training. And rehabilitation of a disabled dependent. The deductions limit is set at Rs.75,000 per year. Which goes up to Rs.1.25 lakh for severe disabilities.
5. Health Insurance Premiums
Under Section 80D, tax benefits are available for health insurance premiums paid for your children. The maximum claimable amount for premiums paid for your family is Rs.25,000. This includes your children. If your child is a senior citizen, the deduction limit increases to Rs.50000.
6. Savings Account Interest
Any interest earned on savings accounts held in the name of minor children is taxable in the hands of parents. However, under Section 10(32) you can get an exemption up to Rs 1,500 per child. This helps in reducing the tax burden.
7. Public Provident Fund (PPF)
Opening a PPF account in the name of a child qualifies for the deduction under Section 80C including tax-free interest and maturity proceeds.
8. Term Insurance
If you do not exceed the Section 80C limit of Rs.1.5 lakh per year with your investments, you can invest for your child to benefit from the full exemption. For example, you can invest in the PPF, Ulips, mutual funds, and some classic plans, but keep in mind that the income from these will be added to your total income and taxed at the corresponding rate. This can be avoided by investing in income-tax-free securities such as PPFs or equity mutual funds, where profits of less than Rs.1 lakh per year are not taxed.
How do you benefit from these?
To fully use these tax benefits plan your finances carefully. Keep records of all expenses and investments related to your children. If needed consult a tax advisor to ensure you are using all available deductions.
By understanding and using these tax benefits, you can lower your tax burden. Save money for children’s future. Filing ITR may seem hard but with these benefits, it can become easy and more rewarding.
Tax planning is a very important part of managing your money. Mainly when you have a family, you must take advantage of the various tax benefits available and can make sure that you are not only following the law but also making the most of the opportunities available to you.
