New parents have a host of new issues they have to deal with on top of taking care of a newborn. There are many changes they can make when it comes to taxes that can affect the family’s financial well-being. Off the top, it is important to take advantage of the Child Tax Credit that has increased after 2018. Next, it is important to properly secure the Earned Income Tax Credit that offers more incentive for parents. It helps to look into Dependent Care Credits if it applies to you. One should not overlook lowering their tax burden through investments for their children like college savings plans, IRA’s, and healthcare.
- Because the tax code phased out personal exemptions for dependents it is important to take advantage of the child tax credit which has increased.
- As new parents it is important to take advantage of the Earned Income Tax Credit which provides more credit for parents.
- Investing for your child’s future through college savings plan, IRA’s, and other investments can help with tax burden.
“Changes to the U.S. tax laws in 2018 effectively phased out the personal exemption for dependents. For a lot of families, this was an important tax break that was no longer available.”