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Congratulations! You’ve entered a new and exciting chapter in life: parenthood.
This bundle of joy means diaper changes, late-night feedings, and more love than you ever thought possible. But the fun doesn’t stop there! You also get tax benefits.
Here are a few new things to look for when filing your taxes this year.
Your Child’s Social Security Number
In order to claim your new child as a dependent on your tax return, the first thing you need to do is get him or her a Social Security number. If you don't, you'll delay the process. You can request a Social Security card at the hospital when you apply for a birth certificate.
Child Tax Credit and Dependent Exemption
Kids are great. A new baby gives you a $1,000 tax credit, plus the ability to claim a $4,000 tax exemption. With a credit, your tax bill is reduced dollar for dollar, while an exemption reduces the amount of income that Uncle Sam can touch. Age and income limits do apply, so ask your local tax pro for details.
If you're a single parent, you may be able to file your returns as head of household rather than single. The advantage? You get a bigger standard deduction, and you'll fit into a better tax bracket. In order to be considered head of household, you must pay more than half the cost of providing a home for a qualifying person (your child).
Don’t let taxes stress you out. A tax pro is the way to go!
Child and Dependent Care Credit
Did you pay someone to care for your child last year? If so, you may be able to get some of your money back. You can claim this credit—a percentage of expenses based on your income—until your child turns 13 as long as care is provided while you and your spouse work or look for a job. An experienced tax advisor can help you determine if you qualify and what kind of credit to expect.