3 Ways to Simplify Your Taxes as a New Parent
Changing diapers. Figuring out childcare. Divvying up chores and babycare. Life as a new parent is stressful enough, but when tax season rolls around you might want to hit the “panic” button and hide for cover. And it’s no surprise that welcoming a little one into your family is expensive. According to an analysis by the Brookings Institution, the average cost to raise a child born in 2015 through age 17 is a staggering $310,605—and that hefty price tag doesn’t include the cost of college.
With the extra responsibilities and expenses that come with caring for a little one, every minute and dollar you can save counts. Here, find our top tips to make doing your taxes as a new parent as simple as possible.
Gather up everything you need ahead of time so you’re not scrambling at the last minute to find important documents. You probably already know what you needed pre-baby (income forms, student loan info, real estate taxes paid, etc.). But here’s a list of some new paperwork you might need post-baby:
- Baby’s social security number
- Childcare costs and the provider’s tax ID number
- Medical and dental expense records
- Records of Medical Savings Account (MSA) contributions
- Adoption costs and records, if applicable
Having a little one means more changes and challenges every day. As life gets more complex, TurboTax’s refund calculator makes recommendations for your unique situation to help you get the most out of next year’s refund and keep more of your money. For current TurboTax customers, your estimate has already been started for you. Wondering what it takes into account? Here’s a rundown of some of the most common credits for new parents.
Child Tax Credit For the 2022 tax year, the child tax credit (CTC) is up to $2,000 per kid.
How to qualify: Your child has to be 17 years or under, be a dependent and live with you for more than half of the year and provide no more than half of their own support. Note the income caps for the CTC: If you are single and make more than $200,000 in a year, or $400,000 if you’re filing a joint return, you won’t qualify for the full tax credit. However, you might qualify for a partial credit.
Child and Dependent Care Tax Credit If you paid for a nanny, babysitter, or daycare center so you and/or your spouse could return to work—or to actively seek work—you can receive a tax credit of up to $3,000 for one child, and up to $6,000 for two or more children. Your children would need to be under 13 years old at the time care was provided.
How to qualify: You wouldn’t be able to claim this tax credit if you were married and filing separately. You could qualify if you are filing your taxes married and filing jointly or a widow or widower with a dependent.
Earned Income Tax Credit The number of kids you have plays into your eligibility for the Earned Income Tax Credit (EITC).
- One child: $3,733
- Two children: $6,164
- Three children: $6,935
How to qualify: The criteria to qualify for the EITC is largely based on income and number of children. If you have three or more children, the cap on your adjusted gross income (AGI) is $53,057 for those filing single, head of household, or widowed, and $59,187 if you’re married and filing jointly. Income thresholds decrease as the number of kids drops. Plus, for 2022 your investment income needs to be $10,300 or less.
If the thought of tackling your taxes on your own feels overwhelming, but trying to schedule an appointment with an accountant seems impossible, the good news is that there are other options. For example, TurboTax Live matches you with a dedicated tax expert who will answer your questions and help you get your biggest refund possible, guaranteed—so you can get back to enjoying your bundle of joy ASAP.
