Strengthen Your Family Through Biblical Homeschooling

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homeschool tax credit

“Children are a heritage from the Lord, offspring a reward from him.” Psalm 127:3

Children are indeed a gift from the Lord. To offset some of the financial costs of raising them, the new tax law may be able to help. Enacted at the end of 2017 this law provides a great tax benefit to many homeschool families. Below I highlight the change in the law from 2017 to 2018 and three ways you can utilize the potential tax savings.

Law in 2017

In 2017, the child tax credit let you reduce your federal income tax bill by up to $1,000 for each qualifying child under the age of 17 you claim as a dependent. The child must be your daughter, son, foster child or adopted child but can also be a grandchild or descendant of one of your siblings. You were able to claim an exemption of $4,050 per person and the standard deduction was $12,700.

The income limit for married people filing a joint return was $110,000 of modified adjusted gross income. If you made less, you would receive the full credit. If you made more, the credit would begin to phase out by $50 less in credit for every $1k over the $110,000.

Example:

Joe and Rhonda have five children. Their modified adjusted gross income (MAGI) is $120,000. They have $17,000 of deductions and $28,350 (7 people x $4050) of exemptions dropping their taxable income to $74,650. They owe $14,401 of federal tax. Since they are over the $110,000 MAGI limit, their child tax credit is phased down to $500/child for a total credit of $2500 dropping their federal tax bill to $11,901.

Law in 2018

The new law increased the child tax credit to $2,000 for each qualifying child, eliminated personal exemptions, increased the standard deduction for married filing jointly to $24,000, lowered the tax brackets for some and increased the income threshold to receive full benefit of the credit from $110k to $400k.

Let’s look at how Joe and Rhonda would do under the new law.

Example:

Let’s assume Joe and Rhonda make the same modified adjusted gross income in 2018 ($120,000). They now get the standard deduction of $24,000 but lose the personal exemptions which makes their taxable income $96,000 ($120,000-$24,000). They will owe $12,999 before applying the tax credit. Since they have 5 children, they pick up an additional $10,000 child tax credit (5 X $2000) which drops their federal tax bill to $2,999! This equates to $8,902 less in tax paid!

Three Ways to Utilize Tax Savings

  1. Build your emergency fund. Having 3-6 months of living expenses in a savings account is crucial for a solid financial foundation.
  2. Pay down debt. Use these savings to pay off/down credit cards, student loans, auto loans or your mortgage.
  3. Fund a Roth IRA/Convert IRA dollars to Roth. Roth IRA provides tax-free growth and if withdrawn after 59.5 it can all be withdrawn tax-free. Plus, Roth principal is available penalty-free for withdrawal. Withdrawal of earnings before 59.5 would be subject to a 10% penalty.

Conclusion

Depending on the specific situation the new child tax credit can provide a great opportunity to save, pay down debt or give more to God’s Kingdom!

 

Authored by Michael Pemberton, Certified Kingdom Advisor®, RICP®, Financial Advisor, of Strategic Stewardship.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC.  This is for general information only and is not intended to provide specific investment advice or recommendations for any individual.  It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

 

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And make your plans to join us at Teach Them Diligently Conventions this spring because we’ll have a special track of sessions that are all about finances, money savings, and financial education.

 

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For more great articles about teaching your children how to manage their money and more homeschooling information be sure to check out the Teach Them Diligently Blog.

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Highschool graduates tossing their caps in the air

Today’s guest post was written by Bethany Davis, a college senior and campus leader from South Carolina.

As a senior in college, I am a few years removed from high school and somewhat entrenched in college life. I’m currently finishing out this semester, which means I will only have one semester left in my college career…crazy.

I’ve been thinking though: what should high schoolers know? What are some things I would’ve wanted to know as an incoming freshman? So here is my list of 8 things every high schooler should know:

1. Get used to using a computer.

Actually just get used to using technology in general really. My sister Abby gave me this tip. She’s only a sophomore, so she had some insight that I may have forgotten. It is true though. I guess part of this will depend on where you go to school, but my school does a lot online. I’ve checked grades, read class announcements, taken quizzes, and done homework online.

2. Email! Turns out its not outdated, kids.

This tip kind of goes along with number 1, but I’ve never used my email as much as I have since I started college. During school, I check my email about as much as Facebook or Instagram. Staying on top of email is important.

3. Figure out this syllabus thing.

Early on, I had my homework transferred from my syllabi into the calendar on my phone. I could check it every day and see what was due. As I got older, I simply took pictures of my syllabi on my phone. I had what I needed right there in my photos and could see what was coming up. I realize some people might absolutely hate that system… buying a planner and putting assignments in by hand is a very valid option too. Just make sure you don’t neglect your syllabi. They are important pieces of paper.

4. Make connections with teachers early.

Don’t be afraid to talk to your teachers. If you’re struggling in a class, go to your teacher. If you need help on a paper, go to your teacher. Just being friendly with people usually makes a difference. Teachers are no exception. If you want to succeed, and they want you to succeed, it will only benefit you to show them you’re trying.

5. Don’t buy all your books new.

Rent. Buy from friends. Find upperclassmen in your major. Just don’t pay full price for all your books unless it’s absolutely necessary.

6. Speaking of your major, don’t stress about it!

I changed my major, and it wasn’t the end of the world. In fact, it was one of the best decisions I made in college. I didn’t change till about the middle of my sophomore year. Now I’m a Journalism & Mass Communication major, and I love the opportunities I’ve gotten as a result of my major change. It worked out for me to still graduate on time. Obviously that’s ideal. That being said, you don’t have to switch. If you’ve found something that mixes what you’re interested in with what you’re good at, you may have found your career. The good thing is, God is in control. Don’t stress, friends!

7. Freshman 15 is a thing.

In fact, for me I think it was freshman 20, but who’s counting? Not having mom to check up on you can really make a difference, so be conscientious of what you’re eating. This is a great time to grow in discipline in general, specifically in your eating habits.

8. People are more important.

Schoolwork is definitely important. It’s why you’re at college in the first place. But school will most likely be overwhelming at times. Don’t use that as an excuse to neglect those around you, those with whom you can have amazing ministry. That being said, your schoolwork is probably more important than socializing all evening Monday through Friday. ;)

 

I hope these 8 tips were insightful. There are so many other tips out there. At Teach Them Diligently, we actually have someone who wants to help you with your questions as you navigate through this high school-to-college transition. Our Homeschool Guidance Counselor is available right now to help you find your way to the next step in your quest to find God’s perfect will for your life. Sign up to join that free program now. You can even secure a free family registration to Teach Them Diligently and get some great college information by attending our homeschool to college fair!

Also check out these other fun and helpful articles and resources from Teach Them Diligently and friends.

A thank you note to mom from a grateful homeschool graduate   Mom and dad, if you’re discouraged and wondering if you are making the right decision by homeschooling high school, this is the post for you! :)

Homeschool Highschool Pinterest Board

How to help your teen financially prepare for college

 

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About David and Leslie Nunnery

Leslie Nunnery and her husband David founded Teach Them Diligently, the nation’s premier source for gospel-centered homeschool events. With seven years of homeschooling experience from preschool-high school and a passion to encourage and equip homeschool families, this mom of 4 shares her know-how and insights weekly through Teach Them Diligently media and on TeachThemDiligently365.com.

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