January Baby (Unmarried)

[cbnyc89]

Hi there, 

Expecting a Jan 2020 baby (yay) and wondering what's the best course of action to take advantage of the tax deductions and get less cash taken out of my paycheck / avoid any unwanted surprises. 

A few bits of info & related questions:

- My partner and I are not married so I was thinking of filing in 2020 as head of household. Is that the best option?

- Right now I have 1 allowance: how many should I add? 

- My income in in the 75k-90k range, renters, 1 job so a pretty straight-forward tax situation overall.

- Should I file a new W-4 right after the baby is born?

Thanks much! 

[Critter]

Yes ... once the baby is born you should fill out a new W-4 at work ... review the form carefully as it has changed a lot.

And the child can be claimed by either of the parents if you are not married but they cannot be listed on both returns ... crunch some numbers before either of you file to determine the best possible combined  outlook. 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

[retiree]

The tax return you prepare and file in 2020 is actually for your 2019 income, expenses, and taxes.  You can only claim a baby that was born prior to 12/31/2019 midnight.  If your baby is born in January 2020, you will claim that deduction next year on the tax return you file in 2021.

You my want to update your W-4 (see step 3) that you file through your employer.  (edit: You could add one (1) dependent to your W-4.

[Critter]

@retiree    Look at the new W-4 ... the allowances are gone.   https://www.irs.gov/pub/irs-pdf/fw4.pdf

[Vanessa A]

 Adding allowances just decreases the amount of taxes you have withheld.  So, technically, you would only need to change it if you want to have less taken out of your check every week.  Since you have other income, you may not want to change that or you can.  There is a tool in TurboTax under Other Tax Situations that allows you to fill out a new W4.

As for who can claim the baby...Many people in your situation will fill out their returns both ways to see which way benefits the household the most then the one with the biggest benefits of claiming the child will actually claim them. Since there is no longer an exemption for dependents, the Child Tax Credit and Dependent Care Credits are the primary benefits one will see from having a child. 

[cbnyc89]

Right that I know. My question is re: whether or not I should change my withholding levels in 2020 for 2021 filling in order to not loose out on a) avail cash and b) any future tax deductions. 

Basically 2019, the only thing that I may be able to toy with are medical expenses. 

[Carl]

With your level of income I would suggest you *NOT* change anything on the W-4 until "AFTER" you file your 2020 tax return, in 2021. If you have an exorbitantly high refund, then change your W-4. But overall, I seriously doubt you'll see that much of a change in your tax situation from 2019 (filed in 2020) to 2020 (filed in 2021).

At best, as a single parent you could possibly qualify for the childcare credit if you pay a qualified childcare provider to watch the baby so you can work. I believe the max possible credit on that is $3000 for each qualifying dependent.

For the basic rundown on the childcare stuff, see https://americantaxservice.org/child-dependent-care-tax-credit/ and I wish you the best of luck in finding a qualified provider willing to accept a newborn under 6 months. But overall I assume this is your first. So get ready for your name change? From Jan 2020 forward for the rest of time, your new name is "MOM". Congratulations!