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How does a new dependent affect my taxes?

SOLVEDby TurboTax542Updated 4 weeks ago

Families grow and change all the time. Now that you have a new dependent, you may be able to save more on your taxes as a family. While there are qualifications for who you can claim as a dependent, we’ll help figure that out and make sure you get all of the advantages you deserve. Here are some things to note as you get started on your return.

1. You can claim a child born anytime in 2023 on your 2023 taxes

Assuming they meet all the other dependent qualifications, you can claim a child born anytime in 2023 on your 2023 taxes. When we ask how many months your newborn lived with you, always answer The whole year, even if your baby was born on the last day of 2023. Answer the same for any health care coverage questions if your newborn was insured from the date of birth, because you’re able to claim the child for the entire year, no matter when they were born in 2023.

2. You can claim adult dependents you support financially, even if they don’t live with you

If you financially support a relative, you can claim them as a dependent, even if they don’t live with you. They have to meet certain criteria, but if you cover 51% or more of their finances, you can add them to your list of dependents. And if you support an adult dependent that isn’t actually related to you by blood or marriage, then they must have lived with you for the entire year in order for you to claim them. Just tell us about all of your dependents and we’ll determine if they qualify.

3. You can claim certain credits

Fortunately, there are many credits available to help families with dependents. The Child Tax Credit and Credit for Other Dependents, can help with your children and relatives. The Child and Dependent Care Credit, is available to you if you paid for their care while you worked. You can also claim medical and education expenses you paid for your dependents. We’ll show you all of these as you go through TurboTax and help get you the refund you deserve.

4. Consider starting a state-sponsored 529 plan to save for college

If you have a new child, you might want to start a 529 plan to save for their future education expenses. Sponsored by your state, these plans are a way to put away money for your child’s tuition and college expenses. And when it comes time to withdraw for their education, you won’t pay income tax. Ask your bank or brokerage for more info on your state’s 529 plans and how to start one.

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