Hi! What a great life event! Congratulations!
In addition to the joy of a newborn, there are a number of tax benefits you can take advantage of.
First, a new baby brings with it a tax credit of up to $2,000, even if the child is born on the last day of the calendar year. The credit reduces your taxes dollar-for-dollar, unlike a deduction which reduces the amount of taxable income.
Further, if both parents have earned income, you may be eligible for a child care credit, for expenses you pay for child care to allow both of you to work. The credit is up to $1,050 for one child under age 13. The amount of the credit depends upon your income and how much you pay for the child care.
These articles describe these and other tax benefits:
You also asked about which parent should claim the child -- the higher or lower wage earner. I'm assuming that you are opting to file as Married Filing Separately rather than Married Filing Jointly. Assuming each parent is eligible to claim the child, because of the income thresholds and limits, you should prepare your tax returns both ways to see which parent benefits the most from a tax standpoint.
I hope this helps!
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