As a parent entrepreneur, you face unique challenges that go beyond running your business—you also need to manage your family’s finances. Luckily, the IRS has several tax benefits designed to help you save money, and as a parent, you may be leaving savings on the table if you’re not using them to your advantage.
Here are a few strategies that can make a significant difference in your tax situation this year:
1. Child Tax Credit: Don’t Leave Money on the Table
The Child Tax Credit is one of the most impactful tax benefits available to parents. For 2025, parents can receive up to $2,000 per child, and it’s available even if you don’t owe taxes, depending on your income. To claim it, your child must be under 17, and you must meet income requirements.
This credit is a great way to reduce your tax liability and give your family a little more wiggle room in the budget.
2. Hiring Your Kids: A Win-Win
Hiring your kids for work in your business isn’t just about teaching them the value of hard work. It’s also a brilliant tax strategy! You can pay your children for age-appropriate tasks, and those wages are tax-deductible for your business.
This strategy works best if your business is structured as an LLC or S-corp, as it reduces your overall taxable income while giving your kids the opportunity to start saving for the future. Plus, they can contribute to a Roth IRA, growing their money tax-free for retirement.
3. Health Savings Accounts (HSA): A Hidden Gem
If you have a high-deductible health insurance plan, consider contributing to an HSA. This account allows you to save money for medical expenses with tax-free growth. The best part? Your contributions are tax-deductible, meaning you can lower your taxable income.
Not only does an HSA reduce your tax burden, but it also helps you prepare for future medical expenses without paying taxes on the gains.
4. Other Savings Tips for Parents
There are plenty of other tax strategies to consider, such as claiming dependent care benefits, maximizing your retirement contributions, and utilizing tax-free savings accounts. Be sure to speak with a tax professional to identify any additional deductions you may qualify for based on your family’s unique circumstances.
By using these tax-saving strategies, you’ll keep more money in your pocket, which you can reinvest in your business or save for your family’s future.
