New child

[tylerveit1]

I have a new child adding to my Household. How does that affect my taxes?

[carolineb · Accepted solution]

Congratulations @tylerveit1!

Here is a link filled with helpful information for you during this life changing experience: 

Birth of a Child

Best of luck with your new baby! 

[carolineb]

Here are some highlights from the link  provided above:

• The Child Tax Credit for tax year 2023 and 2024 is $2,000 per child for qualifying children through age 16. A portion of this credit is refundable as the Addition Child Tax Credit meaning that eligible families can get it in the form of a refund, even if they owe no federal income tax.
• If you're single, having a child may allow you to file as a head of household rather than using the single filing status, giving you a bigger standard deduction and more advantageous tax brackets.
• Having a child increases the amount you can earn and still claim the Earned Income Tax Credit (EITC).
• If you pay for childcare to allow you to work and earn taxable income, you may be eligible for the Child and Dependent Care Credit worth up to $1,050 for the care of one child under age 13, or up to $2,100 for the care of two or more children under 13.

[carolineb]

Hi @tylerveit1 ! 

Just following up on the impending birth of your child, or perhaps you have already met your new baby! I wanted to be sure to stress the importance of obtaining a Social Security number so that you can claim your parental tax breaks. The easiest way to get a Social Security number for your newborn is to apply when you provide information for your baby's birth certificate in the hospital. If you wait to apply for a number at a Social Security office, there may be a long wait, which can be stressful with a new baby. 

Once your child has a SS number, you can benefit from one or more of the following tax breaks: 

• Child Tax Credit and Additional Child Tax Credit:  The maximum amount of CTC per qualifying child is $2,000, while the refundable part of the credit, ACTC, is worth up to $1,600 for each qualifying child, based on your income. The 2017 Tax Cuts and Jobs Act temporarily doubled the maximum CTC from $1,000 to $2,000 per child under 17, while also eliminating the personal exemption. All will revert to pre-TCJA levels at the end of 2025 when the TCJA sunsets. Currently Congress is considering either making TCJA permanent, or at least increasing the amount of CTC for 2024 but as of the date of this post (8/21/2024) no legislation for either has passed into law. 
• Dependent Care Benefits: This is a great tool to avoid taxation on some of your wage income. If you are a working single parent or married couple paying for care for your child while you work, you can contribute up to $5000 of your wage income to a Dependent Care Flexible Savings Account. As long as this money is used to pay for child care, you are never taxed on it. In some cases, you may still qualify for a Child and Dependent Care Credit on your return in addition to the tax benefits of a Dependent Care FSA (see below). Contact your employer to see if they offer this benefit.
• Child and Dependent Care Credit:  You may be able to claim the child and dependent care credit if you paid expenses for the care of your baby while you and your spouse work or go to school full time. Generally, you may not take this credit if your filing status is married filing separately. The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals), and depending on your income, you receive credit for up to 20% of these dollar limits.  If you received dependent care benefits that you exclude or deduct from your wage income, you must subtract the amount of those benefits from the dollar limit that applies to you.
• Other parental benefits that may apply to first time parents are the Head of Household filing status for single parents who maintain a home for a dependent child, the Earned Income Tax Credit for single or joint couples who are within a certain age and income range, and the non-refundable Adoption Credit which can be used to reduce tax liability for taxpayers who adopt children.

You can find additional information on these benefits in our Intuit/TurboTax Community Happy parenting!