Smart Tax Deductions for Families in 2025
- Nir Yona
- Oct 20
- 7 min read
Raising kids in Central Texas costs real money: Child care, after-school, Braces, and college tuition, to name a few. The tax code gives families a few ways to cut the bill. My goal as a local CPA in Round Rock is to point you to the parts that matter and skip the noise.
A quick note on 2025. The standard deduction went up. That helps many Austin area families even before we talk about itemizing. For 2025, the amounts are $31,500 for married filing jointly, $23,625 for head of household, and $15,750 for single or married filing separately. (Source: Kiplinger.com)
What counts as “smart” for family taxes
“Smart” means simple steps that save real dollars. Utilize credits. Keep clean records. Check the rules once and then stick to a routine.
Quick 2025 numbers families ask about
Standard deduction: $31,500 (MFJ), $23,625 (Head of Household), $15,7500 (Single/MFS). IRS
Earned Income Tax Credit (EITC) max for 3+ kids: $8,046 (other amounts vary by family size and income). IRS EITC Tables
Medical expense threshold when itemizing: only expenses over 7.5% of AGI count. IRS
High-impact family credits & deductions (2025)
Child and Dependent Care Credit
What it is
If you paid for care so you could work or look for work, you may qualify. The credit is a percentage of eligible costs for a child under 13 or for a spouse or dependent who cannot care for themselves. You claim it on Form 2441. Schedule a tax prep review. (Sources: IRS & Kiplinger.com)
What to keep
Save invoices, dates of care, and the provider’s SSN or EIN. You must report the provider on your return. If you use a dependent care FSA at work, coordinate the amounts. The FSA exclusion usually reduces what is left for the credit. (Source: IRS)
Medical expense deduction for itemizers
The rule
You can deduct unreimbursed medical and dental expenses that are more than 7.5 percent of your AGI if you itemize. This can include premiums you paid with after-tax dollars, dental and vision costs, certain travel for care, and more, as defined in Publication 502.
What to keep
Explanation of Benefits and receipts
Pharmacy printouts
Mileage and parking for medical visits if you track travel for care
When it helps
Years with big bills, surgery, braces, or out-of-network care
When your itemized deductions will exceed the standard deduction
Child Tax Credit (CTC) for 2025
The basics
For 2025, the maximum Child Tax Credit is $2,200 per qualifying child. The refundable part through the Additional Child Tax Credit is up to $1,700. Phaseouts still begin at $200,000 of income for single or head of household and $400,000 for married filing jointly. File Schedule 8812 with your 1040. Children need valid SSNs. (Source: IRS & Kiplinger)
Can I also claim the child care credit?
Yes. The Child Tax Credit and the Child and Dependent Care Credit cover different things. You can claim both if you qualify.
Education credits that help most families
AOTC - The American Opportunity Tax Credit
The American Opportunity Tax Credit can be up to $2,500 per eligible student for the first four years of higher education. Up to 40 percent can be refundable. Keep Form 1098 T and proof of required books and fees. (Source: IRS)
The Lifetime Learning Credit
The Lifetime Learning Credit can be up to $2,000 per return. It helps with undergraduate, graduate, and professional courses. It is not refundable. Income limits apply. (Source: IRS)
Student loan interest deduction
What it is
You can deduct up to $2,500 of qualified student loan interest. This is an adjustment to income. You do not need to itemize. The deduction is limited by your modified adjusted gross income each year. Some filers do not qualify, including most married filing separate returns. (Source: IRS Topic No. 456.)
What to keep
Form 1098 E from the loan servicer
Proof of payments if the 1098 E is missing or incomplete
Loan statements that show interest vs principal
Quick tips
If a parent paid interest on a loan that is in the student’s name, the IRS may treat it as if the student paid it. See Topic 456 for details.
Home office rules that are actually simple
Who qualifies?
If you use a part of your home only and regularly for business, you may qualify. The IRS offers a simplified method that uses $5 per square foot up to 300 square feet. That keeps the math clean. Employees generally cannot deduct a home office for 2018 through 2025. (Source: IRS)
Earned Income Tax Credit
Why it matters
The EITC can be a big refund for working families under certain income limits. For 2025, the maximum is $8,046 if you have three or more qualifying children. Amounts vary by family size and filing status. Use the IRS tables or ask your CPA to check the numbers. (Source: IRS)
For self-employed parents in Austin and Round Rock
Home office and records
Pick one room or a clear area and keep it for work only. Measure the square footage once. Save utility bills, rent or mortgage interest, and insurance statements. Many freelancers and small shops in our area use the simplified method. It is quick and easy to support.
Child care and estimated taxes
If you pay for child care so you can keep your client schedule, track those costs during the year. Add the provider details to your bookkeeping so Form 2441 is simple later. Also, set aside money for quarterly estimates. Clean records help you qualify for credits and avoid penalties. (Source: IRS)
Quick checklist for Central Texas families
Save daycare and after-school receipts in one folder or shared drive.
Keep medical EOBs and totals, and check if you cross the 7.5 percent AGI mark.
Confirm each child’s SSN and your income against the Child Tax Credit limits. Use Schedule 8812 at tax time.
If you run a small business from home, write down the square footage and choose the simplified method if it fits.
Local note from my desk in Round Rock
Texas has no state income tax, so our focus is on federal. Most families here see the best results when we plan early, gather records as we go, and pick credits first.
Need help
If you want a quick review before you file, reach out. I will look at your numbers, check eligibility, and help you claim what you qualify for.
FAQs: Smart Tax Deductions for Families
Can I claim the Child Tax Credit and the Child and Dependent Care Credit in the same year?
Yes. They cover different things. The Child Tax Credit is for qualifying children. The Child and Dependent Care Credit is for work-related care costs. If you meet both sets of rules, you can claim both.
IRS CTC overview: https://www.irs.gov/credits-deductions/individuals/child-tax-credit
Form 2441 instructions: https://www.irs.gov/instructions/i2441
What is the standard deduction for 2025?
For 2025, the standard deduction is $31,500 for married filing jointly or qualifying widow or widower, $23,625 for head of household, and $15,750 for single or married filing separately.
IRS 2025 adjustments: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
Kiplinger summary: https://www.kiplinger.com/taxes/tax-deductions/602223/standard-deduction
How much is the Child Tax Credit for 2025?
For 2025, the maximum is $2,200 per qualifying child. The refundable part through the Additional Child Tax Credit is up to $1,700 per child, subject to income and earned income tests. Children must have valid SSNs. Use Schedule 8812.
IRS CTC page: https://www.irs.gov/credits-deductions/individuals/child-tax-credit
IRS inflation adjustments and Rev. Proc. 2024-40: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
What records do I need for the Child and Dependent Care Credit?
Keep the provider name, address, and SSN or EIN, plus dates of care and proof of payment. You report the provider on Form 2441.
Publication 503: https://www.irs.gov/publications/p503
Form 2441 instructions: https://www.irs.gov/instructions/i2441
Are college costs deductible, or do I use a credit?
Most families use education credits. The American Opportunity Tax Credit can be up to $2,500 per eligible student and can be partly refundable. The Lifetime Learning Credit can be up to $2,000 per return and is not refundable.
AOTC: https://www.irs.gov/credits-deductions/individuals/american-opportunity-tax-credit
Can I deduct student loan interest?
Yes, if you qualify under the income limits. You can deduct up to $2,500 of qualified student loan interest. This is an adjustment to income. You do not need to itemize.
IRS Topic 456: https://www.irs.gov/taxtopics/tc456
When do medical expenses help?
If you itemize, you can deduct unreimbursed medical and dental expenses that are more than 7.5 percent of your AGI. Keep EOBs, receipts, and mileage for travel to care.
Publication 502: https://www.irs.gov/publications/p502
IRS Topic 502: https://www.irs.gov/taxtopics/tc502
Who can take the home office deduction?
Self-employed taxpayers and qualifying business owners who use part of the home only and regularly for business. Employees with W-2 income generally cannot take a federal home office deduction for 2018 through 2025.
Simplified option overview: https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction
How does the simplified home office method work?
It is a flat $5 per square foot up to 300 square feet. You do not depreciate the home in years you use the simplified method.
IRS simplified method: https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction
What is the Earned Income Tax Credit for 2025?
The EITC is a refundable credit for working households that meet income and eligibility rules. The maximum credit depends on the number of qualifying children. Use the IRS EITC tables to find your amount.
I am self-employed in Austin. What should I track during the year?
Keep invoices and payments, 1099s, mileage or actual vehicle costs, home office notes with square footage, and health insurance premiums if you buy your own plan. If you pay for child care so you can work, save those records for Form 2441.
Home office simplified option: https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction
Form 2441 instructions: https://www.irs.gov/instructions/i2441
Get Help Before You File
Credits and deductions can move the needle, especially for families. A trained professional keeps you aligned with IRS rules and helps document everything cleanly.
Contact Nir Yona CPA, PLLC to review your situation, confirm eligibility, and file accurately for the 2025 tax year.
Content reviewed by a CPA for accuracy under current federal rules as of October 16, 2025.
Complete Sources
IRS. “IRS releases tax inflation adjustments for tax year 2025.”
IRS. “Revenue Procedure 2024-40.” ACTC refundable cap and other 2025 amounts.
IRS. “Child Tax Credit.”
IRS. “About Schedule 8812, Credits for Qualifying Children and Other Dependents.”
IRS. “Publication 503, Child and Dependent Care Expenses.”
IRS. “Instructions for Form 2441, Child and Dependent Care Expenses.”
IRS. “Publication 502, Medical and Dental Expenses.”
IRS. “Topic No. 502, Medical and Dental Expenses.”
IRS. “American Opportunity Tax Credit.”
IRS. “Lifetime Learning Credit.”
IRS. “Instructions for Form 8863, Education Credits.”
IRS. “Topic No. 456, Student Loan Interest Deduction.”
IRS. “Simplified Option for Home Office Deduction.”
IRS. “Instructions for Form 2106, Employee Business Expenses.” Suspension of unreimbursed employee expenses through 2025.
IRS. “Earned Income and Earned Income Tax Credit (EITC) Tables.”
Kiplinger. “Standard Deduction.” Helpful summary of current amounts.
Comments