Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Babies bring us happiness—and tax benefits. I have a number of tax tips that will help you figure out the tax benefit you’re entitled to with a new baby. It’s just a little added bonus to your bundle of joy.
Tax Tips: What are some tax benefits for parents?
The dependency exemption is worth $3,700 per child in 2011. Even if your baby is born on December 31, 2011, you will still get the exemption for the whole year.
What if you are a single parent and this is your first child? In that case, you are entitled to use the head of household (HOH) filing status. You receive a higher standard deduction ($8,500) than a single person ($5,800). As HOH, your tax rates are also lower than a single person’s. Your 15 percent tax bracket is good up to $46,250 instead of $34,500 (single).
Tax Tips: New baby expenses you can and cannot deduct
Medical expenses are common: prenatal care for mom; pediatric care after the baby is born; prescriptions before, during, and after the birth, and the stuff in between, including the birthing expenses. Your insurance will pick up most of those costs, if you have coverage. To use the itemized deductions, your out-of-pocket medical expenses must exceed 7.5 percent of your adjusted gross income (the bottom line on page one of your Form 1040).
After a baby’s birth, donations to houses of worship are common. There also may be a benediction, a christening, a bris, or another special ceremony. However, these special services are considered personal expenses. There is no charitable contribution for these costs, whether paid to your house of worship or to someone providing religious services.
Tax Tips: Further examples of tax credits for parents
Here are two examples of federal tax credits that a new parent may be able to claim:
The Child and Dependent Care Credit is filed on Form 2441. It’s worth 20 percent to 35 percent of the first $3,000 (up to $6,000) per child paid for childcare so that the parent(s) can work or study. Both parents must have income during the year to be able to use it. If one or both parents are full-time students or totally disabled for any month, you can allocate $250.00 worth of income to that month. Since this is a non-refundable credit, it can only be used to wipe out your tax liability. If your taxes are lower than the credit, you lose the benefit of the difference.
You also get a child tax credit (or additional child tax credit) worth up to $1,000 per child. If your income is particularly low (married, jointly, under $41,132 with one child), you may also be entitled to an Earned Income Credit (EIC) of over $3,000. With two more children and an income under $46,044, your EIC may be more than $5,000.
Aside from federal tax benefits, your state may also have a variety of tax credits or benefits for you. Be sure to learn what they are.
Don’t expect the tax benefits to cover the cost of supporting your new child. However, between federal and state tax benefits, you’re going to get substantial benefits to defray the costs of parenthood.
Making Sure You Get the Adoption Tax Credit
Filing Taxes: Seven Reasons to Adjust Your Withholding
Paying Taxes: How Is Your Vice Taxed?
Saving Money: Could You Benefit from the Savers Tax Credit?
Tax Tips and Tax Consequences of Failed Businesses
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.