Having a baby puts you on the hook for years of expenses, but the good news is that several new baby tax breaks are coming your way! Be sure to explore everything that’s available to you and take advantage of whatever you can. Here’s the lowdown:
Child Tax Credit
You’ll receive a $1,000 child tax credit the year your baby is born, and you’re eligible for this credit every year until the child turns 17. The credit is subject to income restrictions, and it starts phasing out at $75,000 for single and head of household filers and $110,000 for joint filers.
Child Care Credit
The IRS offers a child care credit to help offset the expenses, and it ranges from $600 to $1,050. In order to qualify, you must pay for child care in order to work and earn taxable income. If you’re paying for more than one child under 13, the credit doubles to between $1,200 and $2,100. What you’ll have to pay is based on your income and how much your child care costs, but you can claim up to $3,000 in child care expenses for one child and $6,000 for two or more.