Having children can be a joy and a headache all at the same time. There are many parents out there that especially get stressed and overwhelmed during tax time. It’s not easy trying to navigate through the endless amount of information available when it comes to filing your taxes as a parent. The good news is that having kids can actually save you money if you file correctly. So here are some tips when filing this tax season.
Having a new baby brings the most stress, but it shouldn’t. The first thing you need to know is the form you will be using from here on out is the 1040 or 1040A form. This will allow you to get something which is known as a tax credit. This applies to your baby as well as any other children you have. The good news about this credit is that it applies to dependents that can be step-children, foster children, and grandchildren. As long as you claim them on your taxes you are eligible to apply for the credit.
The credit itself awards you $1000 for each child you claim. The only stipulation is that they be under the age of 17 and that you are within the appropriate income bracket. This is why if you are married you need to make sure that you and your spouse are both filing correctly. Any income over the allotted amount will decrease the amount you can get back.
There is also something called the dependent exemption. This is a $3,000 tax break by the government. This doesn’t reduce your tax bill the way the child tax credit does, but it does make your taxes less, and that could land you in a lower income bracket. This is great news for the worrisome parent who thinks that taxes will be the death of them. Having a child may mean added stress sometimes but that doesn’t have to include tax time!