• Start clipping those coupons: According to data from the U.S. Department of Agriculture, it costs an average of $222,360 to raise a child from infancy to adulthood--and that doesn't include college, says the study. Congress, however, has built some incentives to college savings and tax breaks for large medical expenses into the law. .
  
  

Dependency Exemption

• You receive an exemption of $3,650 per dependent, as of tax year 2010. This amount comes right off your taxable income - the functional equivalent of a tax deduction.
  
  

Section 529 Plans

• Section 529 plans are tax-deferred vehicles designed to help you and your family save money for college. Contributions are tax-deductible, the accounts grow tax-deferred, and withdrawals for qualifying higher education expenses are tax free
  
  

Student Loan Interest

• Interest on your child's student loans is deductible, up to $2,500.
  
  

Medical Expenses

• You can deduct medical expenses, including health insurance premiums, to the extent they exceed 7.5 percent of your income.
  
  

Tuition and Fees Deduction

• If you can claim the student as a dependent on your federal income tax return and you paid qualified educational expenses on behalf of your dependent, you may be able to claim the tuition and fees deduction. Both conditions must apply, and room and board expenses don't count.
  
  

Tax Credits

• The above list is restricted to tax deductions. But tax credits are even more valuable, because they provide a dollar-for-dollar reduction in your income taxes. You may be able to qualify for the Child Tax Credit, the Adoption Credit, the American Opportunity Credit and the Child and Dependent Care Credit. For more information, download IRS Publication 970 from the link in Resources.