baby registry

need to buy a gift?

Find baby registries (at top retailers!) and websites with one easy search.

what's hot around the web

you asked...

Am I Eligible for Tax Breaks With Baby?

Tax season is approaching and I’m wondering if I’m eligible for any breaks if I have children?

Re: Tax season is approaching and I’m wondering if I’m eligible for any breaks if I have children?

The Bump Expert

According to Matt Becker, founder of Mom and Dad Money, there are several credits, deductions and exemptions for your growing family.

Everyday costs: As of 2014, the IRS gives you a $3,950 exemption for each child, which means you can lower your income by that amount for tax calculation purposes. For example, if you and your husband earn $100,000, you could calculate your taxes based on an income of $96,050.

Generally, you can take an exemption for your child if they meet the following criteria:

-They are under 19 years of age, or are a full-time student under the age of 24

-They are not filing a joint return or claiming someone else as a dependent on their own return

-The child lives with you (with some exceptions) and you provide more than 50% of his or her financial support

-No one else is claiming the child as a dependent

After that, you may be eligible for an extra $1,000 tax credit for children under 17. Tax credits work like gift cards from the IRS. After calculating how much you owe, treat the credit like cash and wipe its amount directly off your tax total. The remaining balance is what you'll pay the government.

This tax credit isn’t for everyone. Married people filing jointly with an income of $110,000 and below and single parents with an income of $75,000 and under can claim the full $1,000 amount. If you make more, the dollar amount of the credit drops by $50 for every additional $1,000 you earn.

Low-income earners may be eligible for a special additional child tax credit if their credit amount is greater than the tax they owe. This could trigger a refund.

The Earning Income Tax Credit is a refundable tax credit available to anyone, but your eligibility is based on both income and family size. As your family grows, it may be easier to qualify.

Childcare expenses: Have a nanny or use a daycare? You can set aside $3,000 of your childcare costs ($6,000 if you have two or more kids). Then, you can multiply that amount by 20 to 35 percent, depending on your income. (For the full 35 percent you need to earn under $15,000. After that as your income rises the percent you can take goes down.) The answer is the amount of money you can slice from your tax total. The best part: This credit is for everyone. There’s no income ceiling.

Medical expenses: Medical expenses are only deductible if they add up to more than 7.5 percent of your income. Benefits, however, are the perks of having a job, and some companies offer Flexible Spending Accounts. That means your employer can put up to $5,000 of your salary into an account for you to use for medical expenses. (Think doctor copays, eye exams, and over-the-counter drugs.) The catch: This may interfere with your ability to take the childcare credit, so look at your financial situation from both angles -- getting some professional tax help probably wouldn’t hurt. Also, these accounts are usually use-or-lose, which means if there’s money left in there when the year ends, it’ll evaporate unspent.

If you have access to a Health Savings Account you can make pre-tax contributions whether or not you have kids, like with a 401(k), and any healthcare expenses can be withdrawn tax-free. This can be a great way to make some of those medical expenses a little more affordable. And unlike a FLEX account, the money is yours and will simply rollover if you don't use it all within the calendar year.

If you're adopting, you may be able to take a credit of up to $13,190 for your expenses related to the adoption.

College savings: Some states will allow you to deduct contributions made to a 529 college savings plan for state income tax purposes. Here's a good resource to see if your state does so.

In any case, both 529s and Coverdell Education Savings Accounts allow you to save money for education that can eventually be withdrawn tax-free. Additional help for college expenses can be found with the American Opportunity Credit (up to $2,500 per student per year for undergraduates) and the Lifetime Learning Credit (up to $2,000 per student per year for graduate students).

Plus, more from The Bump:

Saving Up For Baby

How to Save $5000 in Baby's First Year

College Savings Plan

Matt Becker, founder of Mom and Dad Money and author of A New Parent's Guide to Saving for College

re: Q: Tax breaks with baby?

With medical expenses, don't forget about all those hospital bills if your child was born in 2008. Even medical mileage can possibly be considered when looking for deductions (my doctor & hospital are 30 miles from home, so that added up!).

Princess_Ariel |

re: Q: Tax breaks with baby?

If my baby will born in October 2009, do I claim them on my 2009 tax return?

mcmaestas |

re: Q: Tax breaks with baby?

Yes. Unless the baby is born after 12pm on 12/31/2009, they will go on 2009's taxes.

|

Q&A: Tax breaks with baby?

If my baby is born in february 2012, do I claim the baby on my 2011 or 2012?

7wekenzwanger |

Q&A: Tax breaks with baby?

You will claim the baby on your 2012 taxes.

MattsLeftyBride09 |

Q&A: Tax breaks with baby?

whats the min u can make a year and still receive child tax credit?????

mamabracy |

Q&A: Tax breaks with baby?

Taxes are so complicated. I suggest that you hire a professional to help you with that. Having a sales tax audit is something quite common nowadays. Good luck and God bless you!!

jacklondon |

Q&A: Tax breaks with baby?

financial tax planning - uk tax planning, uk tax services, accountants Cumbria, J F Hornby.
consumer research - consumer research specialist that focuses on understanding consumer behaviour and customer experience.
billboard advertising - bus advertising, Put your promotional poster where your best prospects can't miss it.
investment management - portfolio management company with an established reputation for professionalism and personal service.
pop up stands - Reflex Exhibitions UK for fast design and delivery of unrivalled value Portable Banner Stands.
bioanalysis jobs - Chemistry Jobs which include Analytical Chemistry, predominantly Mass Spectrometry and Chromatography.
foreign exchange for business - VFX support you with the best technology, competitive exchange rates and peace of mind that your money is safe.
money rates - currency exchange service, currency transfers,money transfers,international money transfers.
foreign exchange - Here at Best Exchange Rates UK, we carry out all our transfers online so they are straight forward

Doremon |

Q&A: Tax breaks with baby?

Thanks for this great article, I am also thinking to ask for a tax break this year so this article came in the perfect moment. I even thought about contacting Florida Federal Credit Union for a credit.

deanjohnson |

Q&A: Tax breaks with baby?

I would love to see how a family from the middle class is dealing with those taxes. I recently had a discussion with my friend, Perry Belcher. I believe that the taxes are still too high and maybe the young families should have more privileges.

LenBrannon |

Am I Eligible for Tax Breaks With Baby?

You should ask your financial adviser if you are or not eligible for tax breaks if you have a baby, but normally every family has a few deductions and financial discounts. If you don't have a bookkeeper, at http://ablretax.com you will find the best financial services on the market. The company will make a strong tax preparation and planning to help you to minimize your future tax liability.

marta8080 |