Having a Baby? Here’s the Tax Break You Need to Know About
If you’re expecting, congratulations! There is no doubt many things are going through your mind, and it might be safe to assume that the least of them are the subject of taxes. Yet, as the reality of caring for another human being continues to sink in, things like how this will affect your tax filings eventually will too.
Two Things You Need to Know About Your Taxes When Having a Baby
We know that having a baby isn’t cheap. We also know that bringing another person under your care could have huge tax benefits for you and your family. In order for this to work out for you, there are two things you need to know:
- Know the tax laws regarding major life events such as having a baby.
- Make sure that your tax preparer knows these things too.
If you’re lucky, you’ll hire a tax preparer that is fully knowledgeable regarding tax breaks for life changing events. He or she will apply that knowledge toward your tax filing. Then again, maybe they won’t know. That’s why it’s so important for you to be knowledgeable about the tax breaks that you might be eligible for.
One of the tax benefits is the dependency exemption. According to the Internal Revenue Service (IRS), the amount of money you could deduct for each exemption was $4,000. It could change for the 2017 tax season through. The website also reads that, “You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. For 2015, this amount is $154,950 for a married individual filing a separate return; $258,250 for a single individual; $284,050 for a head of household; and $309,900 for married individuals filing jointly or a qualifying widow (er).” To learn more about this, read the Phaseout of Exemptions directly from the IRS website here.
Child Tax Credit
Another tax benefit is the Child Tax Credit. It is worth as much as $1,000 per qualifying child. This amount is all depending on your annual income. In order to qualify for this credit, the child has to be under the age of 17, the dependent mush be either a biological child, foster child, sibling, step-sibling, or a child of that person. A grandchild, niece, nephew, and adopted child also qualifies. In addition, that dependent shouldn’t be able to fully provide for him or herself.
There’s more! If for some reason, the amount of the Child Tax Credit is more than what you owe, then you might be able to get an additional tax credit. It’s highly recommended that you consult a professional tax advisor about this first.
Contact Success Tax Relief to learn more about the tax breaks you can take advantage of as a new parent. To learn about all of our services, visit our official website here. You can also visit the official IRS website, but for a personal touch, call the professional tax experts toll free at 1-877-825-1179, email us, or ask us a question through our online form here.