We don't advocate building your family just to reduce your taxes. But you need to know about the savings Uncle Sam offers. Parents also need to be aware that children might have to file returns of their own if they had investment earnings or earned income. Here are deductions from which you can benefit and taxes to keep an eye on when you're a parent.

Be sure to check out our other taxopedias.

What's Deductible? -- A to Z

A C D E F H I K L N P R S

Additional child credit for low-incomers. If you claim the child tax credit (see Child credit) for three or more children and it more than wipes out your tax liability, you may qualify for this credit, which can trigger a refund check from the IRS.

Adoption credit. You can claim a tax credit for up to $11,390 of adoption expenses paid in 2007. The credit starts to phase out once your adjusted gross income exceeds $170,820 and is completely phased out after $210,820. If you adopt a child with special needs, your credit is $11,390, even if the adoption cost less.

Child credit. If you have a qualifying child under the age of 17, this tax credit can knock $1,000 off your tax bill. (The credit starts to phase out when your modified adjusted gross income exceeds $110,000 if you are married, $55,000 if you are filing separately and $75,000 if you are single, a head of household or a qualifying widow or widower.) You can claim the credit for any number of qualifying children, but the total credit amount generally can't exceed your tax liability. (See Additional child credit.)

Child support. Child support payments ordered under a divorce decree are tax free to the recipient.

Coverdell Education Savings accounts. You can't deduct what you contribute to a Coverdell account, but earnings are tax free if the money is used to pay college costs or expenses for elementary and secondary school education. This includes private and parochial schools. Up to $2,000 can be contributed to a beneficiary's account per year.

Day camps. The cost of day camps for your children while you work can be paid with pretax salary run through a dependent-care reimbursement account or can serve as the basis for the dependent-care credit. None of the cost of an overnight camp qualifies.

Death of a dependent. If a dependent dies during the year, you can still claim an exemption for him or her on your return.

Dependency exemption. Each child or other dependent you claim on your 2007 return will knock $3,400 off your taxable income.

Dependent-care credit. Payments made to care for a child under the age of 13, or other qualifying dependent, while you work can earn you a tax credit from $600 (for one dependent) up to $2100 (for two or more dependents). If you do not work but go to school full-time, you may assume an annual earned income of $3,000 to apply this credit. If your employer pays these costs for you (and other employees), the first $5,000 of this benefit can be excluded from your income. Any additional amount the employer pays must be reported as income for you but can be applied toward any remaining qualified dependent-care expense.

Earned income tax credit. This is a special tax credit to reward low-income taxpayers for working. (It is the second largest low-income assistance program after Medicaid.) If your 2007 adjusted gross income is below $39,783 (for married filing jointly with at least two qualifying dependents), you may be able to claim an earned income credit up to $4,716 (which can wipe out your income tax bill and earn a refund of Social Security and Medicare taxes you paid.) The exact amount depends on how many qualifying children you have, as well as your income level.

Exchange students. If you have an exchange student living with you, you can deduct $50 a month as a charitable contribution.

529 plans. See State-college savings plans.

Flexible spending account. See Reimbursement account

Foster-care payments. Providers of foster care are allowed to exclude from their reported income, qualifying payments received from a state or local agency for the care of a child placed in their home.

HOPE credit. Parents who pay tuition for a child who is in the first two years of college can claim the HOPE tax credit. The maximum credit is $1,650 per child. The credit phases out once adjusted gross income rises above $57,000 for singles and $114,000 for married couples.

Kiddie tax. This special tax imposes the parents' tax rate on investment income in excess of $1,700 earned by children under age 18. The first $850 of the child's 2007 income is tax free, the next $850 taxed at his or her (presumably) low rate.

Kindergarten costs. Amounts paid for the cost of kindergarten are eligible for dependent-care credit.

Lifetime Learning credit. This credit picks up where the HOPE credit ends. It applies to tuition for the junior and senior year of college, graduate-level courses and continuing education courses taken by employees. The credit is 20% of the first $10,000 of tuition, for a maximum of $2,000 per tax return. The credit phases out once as adjusted gross income rises above $57,000 for singles and $114,000 for married couples.

Newborns. A child born any time during the year -- as late as New Year's Eve -- qualifies the parents to claim both a $1,000 child credit and a $3,400 dependency exemption. When a child is born, parents should adjust tax withholding on their paychecks.

Parent's election to pay tax on child's interest and dividends. In some cases, parents can report the interest and dividends of a child under age 18 on their tax return and avoid filing a return for the child. That's usually more trouble than it's worth and can boost the family's overall tax bill.

Prepaid tuition plans. These plans basically promise that growth of your investments will keep up with the increases in college tuition. The appreciation is tax-free.

Reimbursement plans. A child-care or medical reimbursement plan (often called a flex plan) offered by your employer can allow you to pay a lot of child-related expenses with pre-tax dollars.

Specialty camps. Amounts paid for the cost of specialty camps, such as computer camps or soccer camps, are eligible for dependent-care credit, even though some education is provided.

Standard deduction. Although a child claimed as your dependent may not claim his or her own personal exemption, a standard deduction of at least $850 is allowed.

State college-savings plans. State-college savings plans (often called "529 plans" after the section of the tax law that authorizes them) allow you to save money tax-free to pay for college. Although contributions are not deductible on your federal return, many states permit residents to deduct contributions on state returns.

Student loan interest. When a parent repays a child's student loan (for which the parent is not legally liable), the child -- not the parent -- can deduct the interest.

See our other taxopedias.

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