33:["$","$L34",null,{"category":"$35","relatedArticles":[{"id":"cG9zdDoyNzY5Njg=","databaseId":276968,"postId":276968,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/3b02fac7ed4b968df109a1571de56eef337973ae16dead35422edea7ab805eb9?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1673,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTUwNg==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19506,"categoryId":19506,"link":"https://smartasset.com/tax-planning/articles","name":"Tax Planning","postCount":{"pageInfo":{"offsetPagination":{"total":153,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"tax-planning","ancestors":{"nodes":[{"name":"Taxes","slug":"taxes","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Taxes","id":"dGVybToxMzY=","slug":"taxes","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$36","date":"2025-02-12T15:50:40","excerpt":"

Alaska residency requirements determine whether an individual qualifies for state tax benefits, including the Permanent Fund Dividend (PFD). To establish residency, a person typically must be physically present in the state with the intent to remain indefinitely. Maintaining residency often involves actions like obtaining an Alaska driver’s license, registering to vote and not claiming residency […]

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","

Ask a financial advisor how Alaska residency requirements affect your portfolio.

","

Alaska Residency Requirements

","

Establishing residency in Alaska requires more than just physical presence. The state considers a range of actions and legal ties to determine whether an individual meets the residency requirements. Here’s an overview of basic components.

","

Establishing and Maintaining Residency

","

To qualify as a resident, an individual must sever ties with any previous state of residency and take affirmative steps to establish residency in Alaska. This includes obtaining an Alaska driver’s license, registering to vote in the state and securing an Alaska-based mailing address. Simply being in Alaska does not establish residency–applicants must show they intend to remain in the state indefinitely.

","

Absences and Residency Status

","

Extended absences from Alaska can impact residency status. While certain absences are permitted – such as military service, education or medical treatment – living outside the state for more than 180 days without a qualifying reason can disqualify an individual. Additionally, a person absent more than 180 days in each of the preceding five years is presumed to have relinquished their residency unless they can provide strong evidence of intent to return.

","

Residency for Dependents and Returning Residents

","

Children born to Alaska residents outside the state can gain residency upon arrival if their custodial parent remains a qualified resident. Dependents who leave Alaska and do not return upon emancipation generally forfeit their residency status. Additionally, individuals who marry non-residents do not automatically lose their residency but may need to take steps to reaffirm their intent to remain in Alaska.

","

Benefits of Establishing Residency in Alaska

","

Establishing residency in Alaska comes with several financial and lifestyle advantages. From tax savings to annual cash distributions, Alaska offers unique incentives for those who qualify as residents.

","

No State Income Tax

","

Alaska is one of the few states that does not impose a state income tax, allowing residents to keep more of their earnings. This applies to both earned income and investment income, making this state particularly appealing to retirees and high-income earners. However, you should note that 107 municipalities in Alaska have a general sales tax ranging from 1% to 7%.

","

Permanent Fund Dividend (PFD)

","

One of the most notable benefits of Alaska residency is eligibility for the Permanent Fund Dividend (PFD). This annual payment, funded by state oil revenues, is distributed to qualifying residents who have lived in Alaska for the entire qualifying year and meet other residency criteria. The PFD amount varies each year based on the fund’s earnings and amounts to $1,702 for 2024.

","

Property Tax Exemptions

","

Alaska offers property tax exemptions for some residents, including seniors and disabled veterans. Homeowners aged 65 and older or those with a qualifying disability may receive an exemption on a portion of their home’s assessed value, reducing overall property tax liability.

","

Hunting and Fishing Privileges

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Residents benefit from reduced-cost hunting and fishing licenses, allowing them to access Alaska’s abundant natural resources at a lower cost than non-residents.

","

What Disqualifies You From Alaska Residency?

","

","

Specific actions can disqualify an individual from maintaining Alaska residency. These factors typically involve establishing or maintaining ties to another state or country:

","$43","

Exemptions to Alaska Residency Requirements

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Alaska allows certain exemptions to its residency requirements, particularly for individuals who must leave the state temporarily for specific reasons:

","$44","

Bottom Line

","

","

Meeting Alaska residency requirements involves more than just living in the state—it requires establishing ties that reflect a long-term commitment while avoiding actions that indicate residency elsewhere. Residency status affects eligibility for tax benefits, state programs and the Permanent Fund Dividend, making it a significant consideration for those planning to stay in Alaska. While certain exemptions allow for extended absences, maintaining residency requires careful attention to legal and financial ties. Consider consulting a financial advisor to better understand the requirements and tax implications for your Alaska residency.

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Tax Planning Tips

","$45","

Photo credit: ©iStock.com/Jacob Boomsma, ©iStock.com/thodonal, ©iStock.com/Cecilie_Arcurs

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\n","featuredImage":{"id":"cG9zdDoyODQ5NzA=","databaseId":284970,"altText":"A parent considering the tax benefits of having a child.","date":"2025-04-11T14:27:52","fileSize":160727,"mimeType":"image/jpeg","modified":"2025-04-17T15:00:52","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2025/04/iStock-1449248117.jpg","__typename":"MediaItem"},"modified":{"datetime":"2025-4-17","readable":"April 17, 2025","readableExtended":"April 17, 2025, 3:07pm ET"},"multipleBylinesByRole":{"editedBy":{"id":"dXNlcjoyMDU=","databaseId":205,"userId":205,"avatar":{"url":"https://secure.gravatar.com/avatar/01f240c2b0d90b313b0da2f508a21de3166341880494b3d2552dfa7e8fb9565d?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Mo Mozuch is a writer and editor based in New York City. He has worked throughout the editorial industry, including as Senior Editor for Newsweek and Executive Editor for International Business Times. 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The IRS offers a number of tax benefits that support families. These opportunities can help you keep more of your income and plan more effectively for your family’s future. But the rules can be nuanced. Eligibility may depend on your income level, filing status and the age of your child. A financial advisor can help you assess these benefits, prepare documentation and develop a broader financial plan to support both your immediate needs and long-term goals as a parent.

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What Are the Tax Benefits of Having a Child?

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Having a child opens the door to several tax benefits that can significantly reduce your federal income tax liability. These benefits range from credits that directly lower your tax bill to deductions that reduce your taxable income. Let’s break down the most common tax benefits of having a child and how to take advantage of each.

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1. Child Tax Credit (CTC)

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The child tax credit is one of the most well-known tax benefits for parents. For the 2024 and 2025 tax years, eligible taxpayers can receive up to $2,000 per qualifying child. Up to $1,700 of that amount may be refundable as the additional child tax credit. This means you could receive a refund even if you don’t owe any taxes.

","

To claim the CTC, you must provide your child’s valid Social Security number, they must also live with you for more than half the year, and be able to claim them as a dependent on your tax return. The credit begins to phase out for individuals with a modified adjusted gross income (MAGI) over $200,000 (or $400,000 for married couples filing jointly.) You’ll claim the CTC using Schedule 8812 on your tax return.

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2. Child and Dependent Care Credit

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The child and dependent care credit is available for working taxpayers who pay for child care in order to work or look for work. It covers care for children under age 13 and allows you to claim up to $3,000 in expenses for one child or up to $6,000 for two or more.

","

The credit is worth up to 35% of those expenses, depending on your income. Eligible care includes daycare, preschool, before- and after-school programs, and summer day camps.

","

Families with a stay-at-home parent, such as a stay-at-home mom, generally do not qualify since the credit only applies if care is needed to work or seek employment.

","

To claim the credit, you must provide the care provider’s name, address and taxpayer identification number, and file Form 2441 with your tax return. The credit is nonrefundable, meaning it can reduce your tax bill but won’t result in a refund if you owe no tax.

","

3. Earned Income Tax Credit (EITC)

","

","

The earned income tax credit is a refundable credit that benefits low- to moderate-income working families. The available credit increases significantly if you have children. For the 2024 tax year, a family with three or more qualifying children could receive up to $7,830, depending on income. For the 2025 tax year, that number rises to $8,046.

","

To qualify, you must have earned income from employment or self-employment and meet certain income limits. You must also have a qualifying child who lives with you for more than half the year. You must use Form 1040 to claim the EITC. The IRS provides an EITC Assistant tool online to help determine eligibility.

","

4. Education Tax Credits (American Opportunity Credit and Lifetime Learning Credit)

","

If you’re paying for a qualifying child’s college education, you may be eligible for education-related tax credits. The American opportunity tax credit (AOTC) provides up to $2,500 per eligible student for the first four tax years of postsecondary education. The lifetime learning credit (LLC) offers up to $2,000 per tax return for qualified education expenses, including part-time and graduate programs. You should note that the AOTC is partially refundable bur the LLC is not.

","

To claim either credit, the student must be enrolled at an eligible institution, and you must include Form 1098-T, which is issued by the school. These credits are claimed using Form 8863. Eligibility is based on income, enrollment status and whether the student is claimed as a dependent.

","

5. Dependent Exemption and Head of Household Filing Status

","

While personal and dependent exemptions were eliminated under the 2017 tax reform law, having a child can still impact your tax filing through your filing status. If you’re unmarried and have a qualifying child, you may be eligible to file as Head of Household. This offers a higher standard deduction and lower tax brackets compared to filing as Single.

","

To qualify for head of household status, your child must live with you for more than half the year. You must also pay more than half the cost of maintaining the home. This filing status alone can lead to significant tax savings, especially for single parents.

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6. 529 College Savings Plans (State Tax Deductions)

","

Although 529 plan contributions are not deductible on your federal tax return, many states offer state income tax deductions or credits for contributions to a qualified 529 college savings plan. These plans allow parents to grow savings tax-free and withdraw funds for qualified education expenses without paying taxes on the earnings.

","

Each state sets its own rules, and some require you to contribute to the in-state plan to claim the deduction. You can check with your state’s tax authority or a financial advisor to determine whether this benefit applies to you and how much you can deduct.

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Bottom Line

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The tax benefits of having a child can be significant, potentially saving families thousands of dollars each year. From the child tax credit to the earned income tax credit and education savings plans, these programs are designed to reduce the financial pressure of raising children and reward working families. But the rules can be complex, and it’s easy to miss out on valuable savings if you don’t know what you’re eligible for. That’s where working with a financial advisor or tax professional can help.

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Tax Planning Tips

","$5d","

Photo credit: ©iStock.com/Hispanolistic, ©iStock.com/Rockaa, ©iStock.com/vgajic

"],"experts":null,"link":"/taxes/tax-benefits-of-having-a-child","modifiedIso":"2025-04-17T15:07:32.000Z","published":{"datetime":"2025-4-17","readable":"April 17, 2025","readableExtended":"April 17, 2025, 3:07pm ET"},"publishedIso":"2025-04-17T15:07:31.000Z","shareInfo":{"title":"6 Tax Benefits of Having a Child: Credits and More","origin":"/taxes/tax-benefits-of-having-a-child"},"isNewsArticle":true},{"id":"cG9zdDoyNTIyMzE=","databaseId":252231,"postId":252231,"author":{"node":{"id":"dXNlcjo5NA==","databaseId":94,"userId":94,"avatar":{"url":"https://secure.gravatar.com/avatar/7c731dd1727acb7246e8305663a0f7b141e21e77a35763773a94c0b236d369f5?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Eric","fullName":"Eric Reed","lastName":"Reed","name":"Eric Reed","postCount":{"pageInfo":{"offsetPagination":{"total":959,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"ereed","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTUwNg==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19506,"categoryId":19506,"link":"https://smartasset.com/tax-planning/articles","name":"Tax Planning","postCount":{"pageInfo":{"offsetPagination":{"total":153,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"tax-planning","ancestors":{"nodes":[{"name":"Taxes","slug":"taxes","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Taxes","id":"dGVybToxMzY=","slug":"taxes","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$5e","date":"2025-02-27T20:42:30","excerpt":"

When you have valuable assets, significant costs or debt, or the possibility of someone getting hurt, a limited liability company (LLC) could help shield you from liability. Additionally, it can also help you with your taxes. For property owners, this business structure is commonly used to organize rental properties into separate LLCs with the goals […]

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","

A financial advisor could help you decide if an LLC is beneficial for tax and liability purposes, choose a tax classification and integrate it into your overall financial strategy.

","

What Is an LLC?

","

An LLC is a business structure governed by state law. This means that the specific details differ across jurisdictions, although most (if not all) states share the same general principals. Along with S-Corps and partnerships, the LLC is a common business structure option for individual property owners or small group owners.

","

As with other business structures, an LLC allows you to operate a business as a legal entity independent of the owners and operators. The company can hold its own bank accounts, own its own assets and is independently responsible for any debts and liabilities. This allows owners to operate a business without being personally exposed to the associated risks and costs, as long as they keep their business and personal assets strictly separated.

","

A limited liability company is relatively easy to form. Among other reasons, this makes it popular for landlords and rental property owners. In fact, it’s common for owners to form a separate LLC for each individual property, allowing them to separate the costs, debts and taxes of each unit while centralizing the profits. This creates a relatively efficient overall business structure that allows you to collectively operate a series of businesses without burdening the entire organization with an outlier’s poor performance.

","

LLC Tax Benefits for Rental Properties

","

Generally, an LLC is taxed on what’s called a pass-through basis. This means that the company itself does not pay any taxes (LLCs that choose to be taxed as C corporations do pay their own taxes.) Instead, the business owner reports any income or losses on their personal tax returns and pays income taxes accordingly.

","

For an LLC with multiple members, the company does need to file an informational tax return with the IRS. This tells the tax agency how the LLC has divided its earnings among its members, to make sure that all income is reported accurately.

","

If you own a rental property, this tax structure allows you to access the liability protections of a small business while keeping the profits entirely as personal income. This can eliminate several (potentially costly) steps involved with other business structures.

","

For example, depending on the nature of your business, a C corporation might have to pay income taxes before passing along the remaining after-tax profits. This is known as the double taxation risk, in which first the company then you pay taxes on the same money, and is only associated with LLCs taxed as C corporations.

","

If your LLC gets taxed as a C or S corporation, you have to issue yourself formal paychecks. These can be subject to additional forms of income and payroll taxes. Members of LLCs not taxed as corporations may have to pay self-employment taxes on the business earnings. These payroll taxes may not be associated with the proceeds of rental property, however.

","

When you pay your taxes, you first reduce all of the property’s income by all of its associated expenses. For example, say your property brought in $2,500 in a month and you spent $750 on maintenance. You would claim $1,750 of taxable income.

","

Bottom Line

","

","

If you operate a rental property, it’s smart to form an LLC. This can protect you from potential liability associated with having third parties on your property. An LLC also separates personal and business assets, reducing personal financial risk. Additionally, it can offer flexibility in how rental income is taxed, depending on the chosen tax classification.

","

Real Estate Investment Tips

","$75","

"],"experts":null,"link":"/taxes/tax-benefits-of-llc-for-rental-property","modifiedIso":"2025-02-28T07:21:05.000Z","published":{"datetime":"2025-2-27","readable":"February 27, 2025","readableExtended":"February 27, 2025, 8:42pm ET"},"publishedIso":"2025-02-27T20:42:30.000Z","shareInfo":{"title":"What Are the Tax Benefits of an LLC for Rental Properties?","origin":"/taxes/tax-benefits-of-llc-for-rental-property"},"isNewsArticle":true},{"id":"cG9zdDoyODE1NDk=","databaseId":281549,"postId":281549,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/3b02fac7ed4b968df109a1571de56eef337973ae16dead35422edea7ab805eb9?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1673,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTUwNg==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19506,"categoryId":19506,"link":"https://smartasset.com/tax-planning/articles","name":"Tax Planning","postCount":{"pageInfo":{"offsetPagination":{"total":153,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"tax-planning","ancestors":{"nodes":[{"name":"Taxes","slug":"taxes","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Taxes","id":"dGVybToxMzY=","slug":"taxes","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$76","date":"2025-04-03T19:38:21","excerpt":"

The federal corporate income tax rate in the U.S. is a flat 21% as of 2025. This rate applies to corporate profits and affects how much income a company keeps after taxes. In addition to the federal rate, businesses may also face state corporate taxes, which vary by state and increase the total tax cost. […]

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A financial advisor can help assess the combined effect of federal and state taxes, and recommend strategies to manage tax liabilities.

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Understanding the Federal Corporate Income Tax Rate

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The federal corporate income tax rate influences a company’s bottom line and its ability to reinvest in growth. A lower tax rate means businesses can retain more of their earnings, which they can then use for expansion, research and development or increased employee wages. A higher tax rate, on the other hand, could limit these opportunities, potentially affecting a company’s competitive edge. For small businesses, the impact can be even more pronounced, as they often have fewer resources to absorb tax liabilities.

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As of 2025, the federal corporate income tax rate stands at a flat 21%. The top rate of 35% was reduced in 2017 with the Tax Cuts and Jobs Act (TCJA). The U.S. federal corporate income tax rate is competitive on a global scale, especially after the 2017 tax reform.

","

Many countries have corporate tax rates that are either similar to or higher than that of the U.S. This makes America a potentially attractive location for multinational corporations. However, some countries offer lower rates or special tax incentives to attract foreign investment. Businesses operating internationally must weigh these differences when planning their global tax strategy, as they can significantly impact tax obligations.

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Potential Deductions on the Federal Corporate Income Tax

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Federal corporate income tax deductions play a crucial role in reducing the taxable income of businesses, ultimately lowering their tax liability. These deductions are specific expenses that the Internal Revenue Service (IRS) allows companies to subtract from their total income, thereby decreasing the amount of income subject to taxation.

","

One of the most common types of deductions available to corporations includes ordinary and necessary business expenses. These are costs that are essential for the operation of the business, such as salaries, rent, utilities and office supplies. The IRS requires that these expenses be both ordinary, meaning common and accepted in the business’s industry, and necessary, meaning helpful and appropriate for the business.

","

Depreciation and amortization are other significant deductions that corporations can leverage. Depreciation allows businesses to deduct the cost of tangible assets, like machinery and vehicles, over their useful lives. Amortization, on the other hand, applies to intangible assets like patents and trademarks. These deductions help businesses recover the costs of their investments over time, aligning expenses with the revenue generated by these assets.

","

Interest paid on business loans is another deductible expense that can reduce a corporation’s taxable income. This includes interest on loans taken out for business operations, expansions or purchasing equipment. However, there are limitations and specific conditions under which interest can be deducted. As such, businesses need to maintain accurate records and may benefit from consulting a financial advisor to maintain compliance.

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Charitable contributions made by corporations to qualified organizations are also deductible, up to certain limits.

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Tips for Reducing Income Tax Liability for Your Corporation

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Here are four common ways corporations reduce tax liability:

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Bottom Line

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The federal corporate income tax rate in the U.S. is a flat 21%, which gives businesses a clear starting point for planning. This rate can affect decisions about investing, expanding, or hiring. However, state corporate tax rates are not the same across the country and can change the total tax that a company pays. Businesses also need to factor in deductions, credits and any international tax rules that may affect their overall tax rate.

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Tax Planning Tips

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