Babies are difficult to manage, especially your first one. There is so much that you don’t know about the everyday needs of the child that you might not be prepared when tax season rolls around. Many parents out there have a lot to learn about filing their income tax when they have children, especially new born babies. First time parents should be extra careful about how they file, or they could be missing out on a considerable amount of tax breaks.
Many parents who are looking to file are interested in knowing about the ins and outs. You need to know that there are two major breaks for children. There is the child exemption and there is the child tax credit. The differences between these two exemptions are significant. One is a tax break. This means that it is money taken away from the taxable income. It’s called the child exemption. First year parents can take advantage of it.
The next thing a parent can do is the child tax credit. The credit is a little bit better than the exemption. While the exemption is technically worth more money, it’s not as good as the tax credit. The credit is money off the final tax bill. This is very important to parents as it can often add to and pad the refund.
For parents who are interested in watching their family grow, it’s important to note that there are more tax breaks for children other than just the first one. The child credit is good for all dependents under the age of seventeen. This includes a foster child, as well as grandchildren who can be listed as dependents. It’s these types of breaks that make it financially helpful to have children, at least when it comes to tax season. Children are a joy, and the government does what they can to not make them a burden.