Your New Baby and Your Taxes

Welcoming a new child to your family is an exciting time! Whether you are adopting or not, whether this is your first child or one of several, it is a big step that requires preparation in many ways, including financial planning. With this in mind, we want to share some tax tips to help parents get on the right track.

Claiming a new child can change your tax rate for the better whether you are married, divorced, or single. You may be able to take advantage of several tax credits for parents, such as the child and dependent care tax credit, the child tax credit and adoption tax credit. These and other credits will benefit you on your next tax return, but each has its own restrictions and requirements that you must fulfill in order to claim it. Be sure to talk to your tax preparer to determine if you qualify for these tax credits.

If you are subject to payroll taxes and you anticipate being able to apply one or more tax credits on your next tax return as a result of the addition to your family, you can adjust the withholding on your W-4 to account for it. Increasing the number of allowances you claim on your W-4 will reduce the amount of tax that is taken out of each paycheck.

Last but not least, it is important to get a Social Security Number for your child. It is required for your child to have a Social Security Number in order for you to claim any of the tax benefits for which you may be eligible. The process is easy to begin once your child is born, and once completed make sure to always keep the Social Security card in a safe location.

If you would like to find out more about how adding a new member to your family will affect your taxes, we here at Ryder & Company are here to help you. Contact us at your convenience for any assistance with financial planning you need.

Ryder & Company is located in West Lawn, PA and offers a variety of accounting services, part-time CFO services, payroll preparation, and much more! We also offer tax preparation for individuals, as well as businesses and nonprofit entities. We assist many individuals and businesses in and around Wyomissing, Exeter, and Reading.

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