Tax Deductions for Families with a New Baby
Do you have a new bundle of joy? If your family has expanded this year, you may be wondering about the current tax deductions that a new baby may help you qualify for. There is no denying that babies are expensive…but, they do help you when it comes to tax time! Take a peek at these important deductions as you prepare your annual return:
Claim Your Child as a Dependent:
In order to receive any new deductions this year for your new addition, you need to claim your baby as a dependent. In order to do this, you will need to request a social security number for your new baby. This can be done easily when you submit the materials for their birth certificate. You will need to include the new social security number on your return so get the paperwork done early to save yourself a headache!
Your tax bracket will determine just how much you save on this exemption, but a new baby will protect approximately $3900 of your income from tax. That will help you save on your tax bill for sure.
In addition for the exemption mentioned above, you will also receive a $1,000 tax credit for a baby born in 2013. This amount may change year to year, so it is important to check this information annually. The tax credit lessens the higher your income is, so double check this information as well.
Review Your W-4 Form:
You may want to consider amending your W-4 at work when you have a child. Your HR office should have this information and you can always get more detailed advice about completing your W-4 from a reputable tax professional.
Childcare expenses are a HUGE expense for families. The good news is that in most cases some of these expenses are deductible. The amount of the credit you receive depends on the number of children you have, their ages, how much you pay for childcare and how much you earn. There is also a tax credit for adopting a child. Again, this can get a bit complicated so tax software or a tax professional may be needed to be sure that you get this right on your return.
Save for College:
Finally, you can also benefit if you are saving money for your child’s college expenses. While that might seem far away to you right now, this is a great way to “save” some money for your child’s future. Saving in a 529 education savings plan is an excellent choice for new parents.
As with any major life change, having a baby is exciting and can also be a bit complicated as it relates to your taxes (and otherwise!). You want to maximize all possible deductions and make sure to keep your return accurate and correct. If you have recently had a baby and have questions about how this might impact your tax return, consider calling Success Tax Relief. Our team of experienced professionals can answer all of your questions and make sound recommendations for how best to complete your return. Contact us so that you can rest easy knowing that your taxes are taken care of.