Children bring us cheer and all manner of new costs from cribs to medical care to diapers. Thankfully, they also bring us a number of tax benefits. Equifax Finance Blog guru Eva Rosenberg is happy to share some of the best ways new parents can get help in her article, “
Tax Tips: Tax Implications of a New Baby.” It’s just an added bonus of your bundle of joy!
The dependency exemption is worth $3,700 per child in 2011. If you’re a single parent and this is your first child, you get to file for head of household at a total deduction of $8,500. Head of household tax rates are also lower: in the 15 percent tax bracket it is good for up to $46,250.
Deductibles for new children can be a little tricky, and insurance can help with items such as prenatal care; pediatric care; prescriptions before, during, and after the birth; and everything in between, including birthing expenses. To use itemized deductions, your out-of-pocket medical expenses must exceed 7.5 percent of your bottom line/gross income. Religious services following the birth, however, are not charitable donations including benediction, bris, christening, or the like. They are considered personal expenses, regardless of if the payment went to the house of worship or someone providing the service.
New parents can take advantage of plenty of further tax benefits to be found on Form 2441 and more in the full article on the
Equifax Finance Blog. Then be sure to let us know about some of the costs you were surprised about new children in the comments below!