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The first year as a parent can be stressful, and it can be frustrating when it comes to filing your income taxes. It’s important for parents, especially first time parents, to file correctly. This is an easy to follow guide on how to get the most from your income tax by having a child.
The child credit is a tax credit. This is different from a tax deduction. A deduction reduces the amount of your taxable income. A tax credit reduces overall tax bill. Each child can be worth $1,000. To start you will need to make sure that your child qualifies. A child who is eligible for the tax credit must be under 17 years old. Since, in your case, it’s a new baby, you are well within your limit. This goes for a newborn baby that you have adopted. You may get a credit for that, as well as a tax break on the out of pocket expenses for the adoption process.
The form you will need for the credit is the 1040 or 1040A form. There is no way for the child to be claimed using a 1040EZ form. It is also important to note that in many cases there is an income limit for the claiming of children, even a newborn child. If the parent and spouse make more than a combined $110,000 annual gross income they are not eligible.
A single parent cannot earn more than $75,000 a year, and if the parent who is claiming the credit is married but filing separately, then they cannot make more than $55,000 a year. Of course, this doesn’t mean you can’t get the credit at all, but rather that the credit is reduced by $50 dollars for every $1000 you make over the limit. These rules sound like a lot, but they are merely a part of the process to make sure that those who need the credit get it in full.
