Uncle Sam and Your New Baby: Must-Know Tax Tips for New Parents
Perhaps you’ve made it past the pacifier phase, survived the crying stage, and conquered the art of diaper changing. Congratulations! Sure, baby chaos may have calmed down a bit, but there are many other concerns for newbie parents that soon need attention, such as college tuition, savings accounts, and taxes. Yes, taxes!
New parents are often unaware of the changes in their taxes that come along with having children. Vanessa Borges, expert tax preparation supervisor for the Tax Defense Network, provides guidance on making this challenging task a bit more manageable.
1. What are some common errors new parents make when filing their taxes for the first time?
New parents often don’t have the time or the energy to research the available tax benefits. First, make sure to get a Social Security number for your new child. You’ll need one to claim your child as a dependent on your tax return to receive all the tax benefits that are available to you! If you didn’t receive one, you’ll need to file a Form SS-5 with the Social Security Administration and provide proof of the child’s age, identity, and U.S. citizenship.
2. What are the biggest changes that come with filing taxes with children vs. without?
There’s one benefit to having children (besides the joy they bring): tax breaks. To claim these benefits, make sure you are informed and use a tax professional to prepare your documents. If you plan to file your tax return yourself, research thoroughly. Check the eligibility rules for each tax break listed to ensure that you meet the requirements.
3. Are there any special deductions parents can take advantage of?
Yes, there are several. These include a dependency exemption, $1,000 child tax credit, child credit, a save for college credit, and many more. Thus, talking to a tax professional is extremely advised.
4. Does the new Obamacare system affect the way new parents should be filing their taxes?
First, the majority of kids (from low or middle-income families) will continue to qualify for free or low-cost health care. These programs have been in effect for years and will continue to provide benefits. Second, through the Affordable Care Act (known as Obamacare), many privately run health insurance companies will offer similar benefits for parents and kids. You can find out if your family is eligible for a plan by visiting the virtual health insurance marketplace at HealthCare.gov.