NFLX up 14%, Capital One's $2B Cheat, and the new SEC Crypto Taskforce

Welcome Back, Fellow Parent

I used to HATE tax season, but now actually look forward to it. It’s the finish line for the year before, where I get to figure out how well I planned financially.

Our goal? A $0 return.

Why?

Because it means that we kept more money in our pocket all year to use for groceries, investing, etc. It’s the most fair scenario in my opinion - I neither owe taxes or receive a significant refund.

I know most people love big tax refunds - I used to as well. But in reality, it simply means you’ve been giving the government an interest-free loan all year long by overpaying your taxes.

Yup, an interest free loan.

For an entire year!

If only it worked both ways.

The next three weeks will be dedicated to helping you crush it this tax season.

Today I’ll cover the top deductions to know as parents. Next week will focus on small businesses and side hustles, and on February 5th, we’ll end on investments and crypto.

Parent-Specific Tax Advantages

Parents have unique tax advantages that can help lighten the financial load. Here are some of my favorite:

• Child Tax Credit

  • A credit of up to $2,000 per qualifying child under 17.

  • This credit directly reduces your tax liability, and up to $1,400 is refundable, meaning you could get money back even if you owe nothing.

• Child and Dependent Care Credit

  • Up to $1,050 for one child or $2,100 for two or more children for qualifying childcare expenses.

  • If you paid for daycare, summer camps, or a babysitter while you worked or looked for work, this credit helps offset those costs.

• Education Credits

  • American Opportunity Credit: Up to $2,500 per eligible student for tuition, books, and supplies for the first four years of college.

  • Lifetime Learning Credit: Up to $2,000 per return for tuition or training costs.

• Earned Income Tax Credit (EITC)

  • Credit for low- to moderate-income families that can be worth up to $7,430 if you have three or more qualifying children.

• Adoption Credit

  • A credit of up to $16,810 for qualified adoption expenses.

  • This helps offset the cost of adoption-related expenses, which can be substantial.

• Medical Expense Deduction

  • You can deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.

  • Costs for doctor visits, prescriptions, dental care, and even eyeglasses for your children can add up quickly, and this deduction helps alleviate the burden.

• Energy-Efficient Home Improvement Credit

  • A credit for making energy-saving improvements like installing efficient windows, doors, or appliances.

• State-Specific Benefits

  • Some states offer additional credits for families, such as child credits, education deductions (including 529 contributions), or tax breaks for first-time homebuyers.

• Student Loan Interest Deduction

  • If you’re paying off student loans for yourself or your children, you can deduct up to $2,500 in interest payments annually.

• Charitable Contributions

  • You can deduct donations to qualified charities, whether they are cash contributions or non-cash items like clothes and toys.

• K-12 Educator Expense Deduction (For Parents Who Are Teachers)

  • Educators can deduct up to $300 for classroom supplies they personally paid for.

As with most things, tax returns are unique to you. Make sure to consult a tax professional for confirmation of what you qualify for.

Happy Tax Season!

Money News  

Here’s a quick roundup of interesting things happening across the markets:

1) Capital One is in the crosshairs of the Consumer Financial Protection Bureau (CFPB). According to the CFPB, Capital One has cheated customers out of more than $2 Billion in interest payments from their savings accounts. If you had one of the “360 Savings Accounts,” I’d definitely keep a close eye on how the lawsuit unfolds.

2) The National Association of Realtors released their top 10 housing markets for this year. Great news if you’re selling a home. Not so great if you’re looking to buy…

3) According to LendingTree, it looks like 36% of Americans took on debt for this past holiday season, with an average amount of $1,181. No surprise, but parents of young children were the most likely (in the survey) to take on debt.

4) Q4 Earnings Season is one of my favorite times of the year - there’s always a few stock stories which stick out. This time around, it’s Netflix. As of last night, Netflix (NFLX) is up 14% after hours, primarily driven by their subscriber base growing to 18.9 million users, a major stock buyback, and 2025 revenue expected at ~$44B. Oh, and they’re raising prices again.

5) The SEC created a new task force for crypto regulations. Time will tell how this will play out, but chatter from the experts online are expecting a bit more leniency here regulation-wise.

Newsletter Highlight

I spend quite a bit of time reading and recently found a very interesting free newsletter I wanted to share about. It’s called Danelfin Trade Idea of the Week, and every Monday, their AI sends out a recommended stock tip.

It’s been super interesting to see the AI stock picks, and even though I wouldn’t always agree with the choices (based on my personal investing strategy), the information is very interesting.

I’d recommend checking it out if you have a minute. It’s free and you can unsubscribe anytime.

Make sure to confirm your subscription to give them a try. Otherwise, their emails may be automatically sent to your spam or promotions folders.

P.S. I’m constantly reviewing and adding to my list of free newsletters I’d recommend. Let me know if any are particularly helpful to you so I can share with the community.

Outro

Thanks for reading, and please don’t hesitate to reach out with any questions.

I love writing content knowing it’s helping at least one family out there. 🤑

See you next week,

The Dollar Dad

Did a friend send you today’s newsletter?