Life Change Checklist: Filing Taxes When You Have A Baby

December 31, 2015 : Lynn Ebel

Editor’s Note: Having a baby can have a lot of implications — and tax is one of them… So is there such a thing as a baby tax credit? Read on to learn more about filing taxes with a baby.

(This post was updated on Oct. 12, 2016.)

Here’s an instance where it’s better to be last than first ­– a baby born at 11:59 p.m. on Dec. 31 is considered a dependent for the full year prior. A baby born one minute later at 12:00 a.m. on Jan. 1 is not considered a dependent until filing a tax return for the new year.

No matter when you have a baby, here are a few reasons why having a child means big changes for your taxes.

1. Deducting Medical Expenses

Many young families do not incur enough medical and dental expenses in the average year to claim a medical expense deduction. That’s because you have to spend more than 10% of your Adjusted Gross Income on medical and dental costs in order to claim the deduction. Going through pregnancy and delivery may change that. Most parents are aware that the cost of the hospital stay to birth your baby and related care will count as medical expenses. But mothers are surprised to find out that the cost of breast pumps and lactation supplies are medical expenses that may help you reach up and over that 10% hump. Remember that you need to keep records for each expense and will have to itemize your deductions on your tax return.

2. Get a Social Security Number for Your Child

You are required to include the social security number (SSN) of any dependent you claim as an exemption on your tax return. If your baby does not have yet a SSN, you should apply for an SSN as soon as possible by filing Form SS5 – Application for a Social Security Card – with the Social Security Administration (SSA).

It usually takes about two weeks to get a SSN once the SSA has all the information it needs. If you do not have the required SSN by the filing due date, you can file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, for additional time (up to six months) to file your return.

3. Claim Your Child as Dependent on Your Tax Return

If you just gave birth to the little bundle of joy, you can feel pretty confident in claiming him or her as a dependent. However, if a child joined your family through other means, like adoption, you can use this tool from the IRS to confirm that they qualify as a dependent. In 2015, claiming a dependency exemption may shelter up to $4,000 of your income from taxes.

4. Read up on Tax Credits

By having a child, you may now be eligible to claim the Child Tax Credit, the Additional Child Tax Credit, the Earned Income Tax Credit and the Child and Dependent Care Credit. Aren’t kids great? Each credit has different requirements and thresholds. You can consult with one of our tax professionals about your unique situation.

4. [BONUS] If Unmarried, Upgrade Your Filing Status

If you would have filed as Single in 2015, but had a baby, you can now likely file using the Head of Household (HH) status. Not only does the H filing status give you a larger standard deduction, it has more favorable tax brackets as well. That means for the same dollar amount of income, you could be paying less taxes as HH instead of Single thanks to your new bundle of joy. If you’re married, there will be no change in your filing status, unless you are considered unmarried by the IRS.

So, whether you give birth to a boy or girl, and whether that baby is born Jan. 1 or Dec. 31, your tax return will undergo a major change.

Hope you found this post informative, as we identified some highlights to claiming a baby on taxes. Head here for more life events that impact your taxes.

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Lynn Ebel

Lynn Ebel

The Tax Institute, H&R Block

Lynn Ebel, JD, LLM, is manager of The Tax Institute's research department. Lynn specializes in real estate tax issues, including property transfers, passive activity losses, and bankruptcy issues.