Tax Tips for New Parents

Tax Tips for New Parents

Getting a Social Security Number for Your Child

Apply at the hospital or via Form SS-5. You need this before you can claim child-related tax benefits.

Child Tax Credit

• Up to $2,000 per qualifying child under 17
• Up to $1,700 refundable as the Additional Child Tax Credit

Child and Dependent Care Credit

• For expenses paid for childcare while you (and your spouse) work or look for work
• Up to $3,000 for one child, $6,000 for two or more
• Credit rate: 20–35% depending on income

Dependent Care FSA

• Contribute up to $5,000 pre-tax through your employer
• Use for qualifying childcare expenses
• Coordinates with (and limits) the Child and Dependent Care Credit

Medical Deductions

• Add your child to your health insurance
• Deduct unreimbursed medical expenses exceeding 7.5% of AGI

Earned Income Tax Credit (EITC)

Having a qualifying child significantly increases the EITC you may receive.

Updating Your W-4

Have a new baby? Update your W-4 with your employer to increase withholding allowances and avoid owing at tax time.

Starting a 529 Plan

Begin saving for college early. Some states allow a state tax deduction for contributions.

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New addition to the family? Make sure your tax situation is updated to reflect your new dependent.