Congratulations on the new addition to your family! Having a little one brings lots of major changes to your life, including at tax filing time. To start with, make sure you have a Social Security number for your newborn, to ensure you can receive the tax breaks to which you’re entitled.
Child tax credit
Simply for having a baby, you’re eligible for a child tax credit of up to $1,000. The amount of the credit is reduced if your modified adjusted gross income is:
- $110,000 or more if you are married and filing jointly;
- $75,000 or more if you are single, the head of the household, or a widow or
widower; - $55,000 if you are married and filing separately.
The tax credit also can be limited by the amount of income tax or alternative minimum tax you owe.
Child care tax credit
You can also take a tax credit of up to $3,000 if you pay someone for child care if you work or are looking for work. If you are married, your spouse also must be employed, looking for a job, or be a full-time student to be eligible for the credit.
The child care tax credit is for up to 35% of qualified expenses, with a $3,000 cap, or a $6,000 limit for the care of two or more children under the age of 13. However, if your adjusted gross income is above $15,000, the percentage of expenses you can deduct is reduced.
Eligible expenses generally include day care, nanny care, baby sitting (as long as it’s not your teen-age daughter), and before- and after-school programs.
Generous gifts
Often friends and family want to help celebrate the new family member by giving cash gifts. There won’t be any need to worry about paying gift taxes unless the gift exceeds $13,000 per person per year. You’ll only need to file a tax return if interest and dividends on the gifts exceed $950.
About the Writer
Susan Ladika has been a writer and editor for 25 years. Her freelance work has covered everything from business to travel to science to international issues, and have appeared in such publications as Science, Town & Country, HR Magazine, Developer, The Wall Street Journal-Europe, The San Francisco Chronicle, and many others. She has also done extensive editing as a newspaper and wire service editor holding positions such as the Tampa Tribune Bureau Chief.
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