Hi Tim!
Congratulations on the new baby! You're probably aware that parents can claim the Child Tax Credit of $2,000 per child, up to age 17. After age 17, the credit drops to $500, as long as they are still your dependent.
The Form W-4, Step 3 is where you would update the form to indicate you have a child under age 17. If you indicate you have a child, your withholding will be lower, expecting that you will claim the child tax credit.
Since you absolutely don't want to owe taxes when you file, you'll want to consider your overall tax situation to be sure you have enough withheld throughout the year. If your spouse works, you'll want to follow the guidance on the Form W-4, Step 2. When both spouses work, it's important to have sufficient withholding to avoid owing taxes with the tax return.
Sincerely,
Kimberly, CPA for over 30 years
@Tim Cox
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