Tax Deduction for a Newborn

When you have a new baby, taxes aren't usually at the forefront of your thoughts. However, if you take advantage of certain tax benefits offered by the Internal Revenue Service, adding a new member to your family can drastically reduce the amount of money you owe at the end of the year.

Qualifying Child

A newborn baby is your qualifying child if he possesses a valid Social Security number and is your adopted child, foster child, biological child, grandchild, brother, sister, stepbrother, stepsister, niece or nephew. You must also be the only person claiming the child on your tax return. You can claim the child if you are filing on your own or jointly with your spouse.

Exemption

If your newborn is a qualifying child, you can typically claim him as a dependent, which allows you to claim a dependency exemption. This exemption reduces your taxable income for the year, thus lowering the amount of tax you will owe to the Internal Revenue Service. As long as your child was born on or before Dec. 31, you can claim the full amount of the exemption for that tax year.

Child Tax Credit

If your newborn is a qualifying child, you may also be able to claim the child tax credit. If you qualify, this credit can reduce the income tax you owe by as much as $1,000. However, if you are single and your adjusted gross income is more than $75,000, if you are married filing jointly and your adjusted gross income is more than $110,000, or if you are married filing separately and your adjusted gross income is more than $55,000, you must reduce the amount of your credit.

Considerations

Because your newborn must have a Social Security number in order to be a qualifying child, it's important to apply for a Social Security number immediately after the child's birth. If you don't have a Social Security number for your child when you file the return, you may incur a $50 fine, and the IRS may need more time to process your refund. If you paid medical costs for the birth of your child, you may be able to deduct them if your total medical expenses for the year exceed 7.5 percent (rising to 10 percent in 2013) of your adjusted gross income.

About the Author

Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.

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