Tax 101

First-time Parent Tax Filing Guide: What You Should Know

Many changes happen when you become a parent, your taxes are no exception!

Last updated:

December 1, 2022


With the addition of a new baby your life undergoes a lot of new changes, your taxes are one of those things that can change. Before you file for the first time as a parent, you may want to review how your taxes might change.

So what can change with your taxes?

A New Dependent

If you are planning to claim your child on your tax return, you will be adding a new dependent.  If you are not sure if you should be the one to claim your new baby as a dependent you can use Let’s Get Set’s “Who can claim your kids” tool.  One thing to remember is that in order to claim your child you will need to have a tax identification number.  For most people this will be your Social Security Number.  If your child was not born in a hospital or you did not get a social security number for your child, you will want to get this before you file your taxes.  If your child needs an ITIN, make sure you apply for it alongside your tax return.  Make sure you do this as soon as possible because you will need to have their social security number before the filing deadline in order to claim the Child Tax Credit and Earned Income Credit.

NOTE: If you use tax software to prepare your taxes, there is one question that can trip up new parents.  The question is usually phrased one of two ways:  ‘Did you live with your child for more than 6 months?’ or ‘How many months did you live with this child?’. This question is usually asked to make sure that you can claim your child, but as long as you lived with them more than half of the time that they were alive (time that they spent in the hospital counts as time they lived with you) then for this first year you can say “Yes, they lived with me more than 6 months” or “12 months”.  This is to ensure that you are correctly eligible for the Child Tax Credit and Earned Income Credit

A new filing status?

Along with having a dependent on your return, if you are single, you may also be able to use a new filing status, Head of Household.  If you are eligible to use the Head of Household status, you will have a bigger standard deduction (the amount of income the government automatically excludes from being taxed on your return).  The change is from $12,950 (for single) to $19,400 (for head of household).  Depending on your tax rate this can be worth hundreds in less taxes (i.e. a bigger refund).  In addition, some tax credits may be bigger by using Head of Household filing status.

New tax credits

One of the biggest changes for parents comes from claiming tax credits.  There are three that new parents can either claim now or potentially get bigger with having a child.

- Child Tax Credit

          If your dependent child is under 17, you may be eligible for a $2,000 Child Tax Credit.  For tax year 2022, only $1,500 is refundable and requires earned income to get the refundable portion.  Each child claimed for the Child Tax Credit will need to have a social security number.

- Earned Income Credit

         The EIC, much like its name states, requires earned income but with one child can be worth up to $3,733 in refundable tax credits.  The EIC has additional eligible requirements but can be worth thousands and is often the biggest portion of a new parent’s refund.

- Child and Dependent Care Credit

         One thing to look out for is the Child and Dependent Care Credit.  If you paid for child care in 2022, you might be eligible.  This credit is for dependent children under 13 for whom you paid child care so that you can go to work.  If you are paying for child care, make sure that you claim this credit.

If your refund goes up, you may want to update your W-4

As a new parent you may be excited to get a big refund, but it may be smarter to reduce your tax withholdings at work.  This is because by reducing your withholdings you can make your paychecks bigger and instead of waiting for your tax refund, you would receive that money throughout the year.  When you update your W-4 form with your employer, you can make sure you are not giving too much money to the government for taxes each paycheck and keep that money so you can cover all the new parent expenses that all of us parents have had.

The changes that come from being a new parent come quickly and as non-stop as the changes that you’ll see in your child as they grow.  Taxes are no different but armed with a little bit of information you can make sure that they are in your family’s best interest.

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