There's no getting around it. Raising and educating kids today costs a bundle. Financially strapped parents deserve some credit - and now they can get it - thanks to several child-related tax credits introduced in recent years.

The Georgia Society of CPAs points out that tax credits can significantly help to reduce taxable income.

Unlike tax deductions, which are subtracted from your gross income, credits are subtracted directly from the taxes you would otherwise owe.

For example, where a deduction might be worth (depending on your tax bracket) 15, 28, 31, 36 or 39.6 cents on the dollar, a tax credit is worth a dollar on the dollar.

THE CHILD TAX CREDIT

For 1999, taxpayers are entitled to a federal tax credit of up to $500 for each qualifying child under age 17 at the end of 1999, regardless of whether or not you itemize.

A qualifying child could be a natural child, adopted child, stepchild, foster child, or grandchild, as long as the child is your dependent. The full credit is available to married couples, filing jointly with adjusted gross incomes (AGI) of $110,000 or less, and singles with $75,000 or less.

The credit is reduced by $50 for each $1,000 (or part thereof) in income that exceeds the phase-out threshold.

HOPE EDUCATION CREDIT

Thanks to the Taxpayer Relief Act of 1997, which authorized the HOPE

Scholarship tax credit, families can claim an annual tax credit of up to $1,500 for each of the first two years of college for each eligible student.

An eligible student is one who is carrying at least one-half the normal full-time course load at a qualified educational institution and is enrolled in a degree program. Eligible expenses include tuition and required fees, but not books, nor room and board.

The HOPE credit equals 100 percent of the first $1,000 of expenses and 50 percent of the next $1,000 of expenses, per student per tax year. You're allowed as many HOPE credits as you have family members who qualify.

The credit is phased out for higher income taxpayers. If you are married and filing jointly, the phase-out is between $80,000 and $100,000 of your AGI.

If you are single, the phase-out is between $40,000 and $50,000.

LIFETIME LEARNING CREDIT

College juniors, seniors, graduate, and professional degree and non-degree students, as well as adults who want to return to school, change careers, or upgrade their skills are eligible for the Lifetime Learning Credit.

For 1999, the Lifetime Learning Credit is equal to 20 percent of the first $5,000 of qualified tuition and fees. The credit is available on a per-taxpayer (family) basis, and is phased out at the same income levels as the HOPE Scholarship. Thus, the maximum 1999 credit that you may claim is $1,000.

You cannot use both the HOPE Scholarship Credit and the Lifetime Learning Credit for a single student. However, you can claim the HOPE Credit for one student and the Lifetime Learning Credit for another.

CREDIT FOR DEPENDENT CARE EXPENSES

The Dependent Care Credit is designed to help defray the costs of caring for children who are under 13 or are handicapped, while you and your spouse work. The credit, which is computed as a percentage of your qualifying expenses during the year, ranges from a low of 20 percent to a high of 30 percent of expenses.

The percentage is based on your AGI. You may apply the credit only to expenses of up to $2,400 for one dependent and $4,800 for two or more dependents.

If your employer offers a dependent-care Flexible Spending Account (FSA), you cannot use both the FSA and the Child Care Credit. Dependent care FSAs are generally more advantageous from a tax perspective, but you should do an actual comparison to determine which provides the greater tax benefit to you.

ADOPTION CREDIT

Adoptive parents may be able to claim a one-time tax credit of up to $5,000 for each adopted child under age 17, for qualified adoption expenses. Those who adopt children with special needs get an extra $1,000 tax break.

Parents who adopt children abroad can take the same $5,000 tax credit, although they are not eligible for the $6,000 credit even if the foreign child is a special-needs child.

Special rules apply to the timing of your deductions.

Qualified adoption expenses include "reasonable and necessary" adoption fees, court costs, attorney's fees, traveling expenses (including meals and lodging), and even home renovation expenses that are required by the state to meet the needs of the child.

As with most tax credits, there are phase-outs at certain income levels. The adoption credit is phased out ratably with modified AGI of between $75,000 and $115,000. The credits are completely phased out for taxpayers with AGIs of $115,000 or more.

The rules governing child-related tax credits can be complex. If you need help determining how to apply these credits, you may want to consult with a CPA for advice.

The GSCPA is the premier professional organization for CPAs in the state of Georgia. With over 9,900 members throughout the state, the purpose of the GSCPA is to promote the study of accountancy and applicable laws, provide continuing professional education, maintain high ethical and work standards, and provide information about accounting issues to the membership and the public. For more information, access our web site at www.gscpa.org.

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