Children bring all manner of joy, including tax joy in the form of federal breaks and deductions. New and soon-to-be parents should keep up with these advantages in the tumultuous period of caring for a newborn. That’s where tax expert Eva Rosenberg comes in, giving us a primer on the Equifax Finance Blog, “
Tax Tips: Tax Implications of a New Baby.”
The first and biggest exemption for parents is going to be claiming a dependent, which in 2011 is worth $3,700 per child. This grows if you are a single parent, who also has access to head of household benefits. Head of household, single parent or otherwise, also enjoys lower tax rates overall, so it is certainly a benefit to take advantage of.
In addition, the Child and Dependent Care Credit is worth 20 to 35 percent of the first $3,000 per child paid for childcare while parents are working or studying. Both parents have to be working in order to use. In addition, there are child tax credits, and low-income families (married, filing jointly under $41,132 with one child) may be entitled to additional credits.
States also offer tax credits which will be very helpful for the big lifestyle change of becoming a parent. For more information about taxes in general, as well as all manner of financial tips, tricks and expert advice, check the