New Parent Series Part I - Dependent Issues and Tax Filing Status For You to Consider

It truly is a magical and to some extent, an overwhelming moment when the doctor places your new baby in your arms for the first time or your family grows through the joy of an adoption. There are so many things to think about. Everything from clothing to food to social and emotional development are concerns that you must consider for this tiny person who is relying on you for survival. With all the changes that are taking place in your life during this time, it is easy to overlook what changes you may need to make concerning your taxes and estate planning.

This is the first part of a five-week series covering topics that new parents may want to consider. Future posts will cover issues surrounding health care FSA's and HSA's; the child tax credit, childcare credit, and employee child care credit (a pretax deduction); tax considerations for families that grow through adoption; and estate planning so that your little ones can be provided for even if you are unable to do so yourself. 

This week our post focuses on when you can claim your child as a dependent for tax purposes and filing as head of household that provides additional tax benefits over filing as "single" for unmarried parents.

When You Can Claim Your Child as a Dependent: Even if your child was born at 11:59 PM on December 31st, you are able to claim that child as a dependent on your taxes for that entire year. Similarly, if you are married just before the stroke of midnight on December 31st, you can file under a married status for that year. To claim your new bundle of joy, the IRS requires that you include the newborn's Social Security number when filing your income taxes. If you are still waiting for this information when it comes time to file your taxes, you can request an extension or file an amended return when you do have the necessary information in hand.

File as Head of Household: If you are an unmarried parent (or perhaps even a married, separated parent due to a pending divorce) who provides for more than half of the annual expenses of keeping up your home, and your home is the primary residence for your qualifying child for over half of the year, you may be eligible to file as "head of household" on your taxes. If your child was born near the end of the year, this status may still be available for you as long as you provided over half of the care for the child's life. If you qualify, this classification allows you to claim a higher standard deduction of $3,000 on your taxes as opposed to filing as "single."

Come back next week when we will discuss health care FSA's and HSA's. In the meantime, if you have any questions regarding your personal taxes and what other exemptions you may qualify for, please feel free to contact Glick and Trostin, LLC at 312-346-8258. 

To read the other posts in the New Parent Series, simply follow these links:

New Parent Series Part II - Healthcare FSA's and HSA's
New Parent Series Part III - Child and Care Tax Credits
New Parent Series Part IV - Adoption Tax Credit and Benefits
New Parent Series Part V - Creating an Estate Pan

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