Tax guide for expecting couples

“Baby on board!”

On an average, the head of a household receives a deduction of about $9,250. Becoming a parent brings in joy and tax benefits all together. Expecting couples would be happy filing for tax credits, because it brings down a bigger proportion of tax. Joy comes with changes. How about getting a drastic reduction of taxes? No matter if they’re married couple or in live-in relationship, tax guide for expecting couples say that they save a taxable income up to $4,000.

Difference lies in dependency exemptions

Parenthood marks the onset of joy in various aspects. One would be surprised to know that 25% of tax proportion is brought down drastically. With a dependent on board, expecting couples turn eligible for a federal income tax exemption that goes up to $3, 650 per year. It starts from the time, after the child is delivered by her mum.

It does worth to be glad news because single-tax filing doesn’t have such an exemption in any aspect. Once the person/couple register themselves as “head of the household” they turn eligible for dependency exemptions.

Head of the household submits Form SS-5, applying for a Social Security number (child). This is when they get a tax identification number for the child.

This is how dependency exemptions come in!

Tweak withholding from paychecks

A dependent is on board and the head of the household goes for W-4. An application to the employer requesting for withholding tax—in regards to paychecks. This way he or she is making room for an additional allowance in their salary.

Income credits for joint accounts

Expecting couples would never forget income credits. This works for joint accounts. People with more than one child have brighter chances to claim income credits. And, the figures go up to $43,941 annually. But for single accounts and joint accounts those haven’t been registered for dependents cannot claim income credits.

(pictures courtesy: pediatriccarenorth)