A. Earned Income Credit
The Earned Income Tax Credit (EITC) Can be used for the basis of building wealth:
Here is how it works;
If you have at lease one child that lives with you over half the year, you may be eligible for this credit. It is set up so that the more money you earn, the higher the credit until you reach an income of $8,050 for one child or $11,300 for two or more children. The credit peeks at $2,747 for one child and $4,536 for two or more children. Therefore the credit can increase your income by 34% to 40%.
The credit then levels off then decreases as income increases but don’t stop striving to increase your earned income. Other credits come into play that I will show you latter that will help make up for the reduction in the earned income credit.
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Coupons are a good way to teach children many life skills. As you know coupons are very plentiful and easily assessable. Merchants use coupons as a way to get consumers to try new products and to bolster customer loyalty. There are many benefits to using coupons while teaching your children. Here are 7 benefits.
1. Frugality. Being frugal is a key to financial prosperity. Teaching your children how to use coupons instills in them the need to be careful with money. Money saved is money earned.
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Hire your kids instead of paying them an allowance!
It is quite common to see children actively involved in the family business. Even young children can perform valuable services. Many business owners, however, miss out on the major tax savings generated by actually hiring their children and paying them a fair wage for their services.
The expense is tax-deductible to you, and the income is tax-free to them. [Reg Sec 1.162-7(a) ] The tax-free limit for dependent children was $5,350 per child per year for 2007, and it tends to be increased somewhat each year. The amount is equal to the Standard Deduction.
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