How to Claim a Newborn on a Tax Return

Raising a child is estimated to cost a family approximately $235,000 over 17 years. The federal government has taken steps to alleviate the financial burden imposed by children by providing tax benefits for children. These tax benefits are available to families beginning in the tax year in which your child is born, regardless of whether it was the first or last day of the year. Your newborn counts as a dependent, and you are allowed one exemption for each of your dependents as well as a child credit.

Step 1

Obtain a Social Security number for your child. The IRS requires Social Security numbers to claim a child as a dependent. This can be done at the hospital where your child was born and when you apply for the child’s birth certificate. If the Social Security number is not obtained at the hospital, you must apply for one on Form SS-5 at the Social Security Administration. This process takes about two weeks to complete.

Step 2

Select head of household under filing status if you are single and your newborn allows you to qualify for this status. If you are married, your newborn will not alter your filing status.

Step 3

Fill in under the Exemptions section on your tax return (Form 1040 series) the first and last name of your dependents as well as each dependent’s Social Security number and the dependent’s relationship to you. Check whether the child is under age 17.

Step 4

Add the exemptions, which are you, your spouse if applicable and your dependents, to determine the total number of exemptions you are eligible to claim on your taxes. Exemptions reduce your taxable income, which in turn, reduces the amount of income tax you will owe the federal government.

Step 5

Claim the child tax credit for your newborn and each of your children. Credits are calculated near the end of your return after your taxable income has been adjusted. The child tax credit begins to be phased out for married couples who have income of $110,000 or more if filing jointly or $55,000 or more if filing separately and single and head of household filers with income over $75,000. You may not claim this credit on Form 1040-EZ.

Tip

  • If you have not received your newborn’s Social Security number by the due date to file your tax return, you may file for an extension and submit your taxes once you have received the number.
  • Since a new child will reduce your taxes, your tax withholding can be reduced as well. You can reduce your tax withholding by filing a new Form W-4 with your employer, claiming your new child as an additional allowance.
  • If you have a child, you should not use Form 1040-EZ no matter how simple your taxes are since it does not allow you to take the child tax credit. Accordingly, to decide whether to file your taxes using Form 1040 or Form 1040-A, you must determine what deductions you may claim as only certain deductions are allowed on Form 1040-A. Form 1040 is the basic tax form and when in doubt, this is probably the best form to use. The IRS website has a series of questions that can assist in this determination.

Warning

  • If you do not report each child’s Social Security number on your tax return, you may be fined, and it could delay the processing of your tax return and ultimately, your refund if you are owed one. The IRS may also disallow the exemption for that child.

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