Had Adopted or fostered a child in 2022 What Tax credits and deductions are important for new parents.
If Chances are that taxes are not top of your mind if you just adopted or had your first child. But Even if you aren’t sleeping well and haven’t been outside for a while, your taxes still need to be done.
Of course with a new child, your tax return will be a bit more complicated than just a return for yourself or a joint filing with a spouse. The The flip side of the coin is that depending on your income, you may be eligible for new tax deductions and credits.
While Tax season has just begun. It’s a good idea now to get as much information as you can so that you don’t have to scramble as soon as it starts. April USA TODAY: Tax professionals tell USA TODAY that 18 deadlines are approaching.
Here’s Here are some other things new parents should know during tax season
Get You can find more information at Social Security Gift card for your child
The First, make sure your child is able to read. Social Security Number John KarlsCPA, director of the High-Net-Worth Family Office Practices At Armanino, a national tax consulting firm. “You can’t claim your child as a dependent on your tax return if they don’t have a Social Security number.”
If If you don’t have one already, you should. Apply immediately. But It could take some time for the process to complete. Social Security Administration To verify the identity and birth certificate of your child, Karls It is advisable to apply for a tax extension as soon possible.
If You don’t yet have a Social Security Number October 16. The tax extension deadline. But The process can be very laborious. Karls.
Head Assessing the household’s status
If You are considered the head of your household if you are a single parent. This means you’ll be able to claim a $19,400 standard deduction versus a $12,950 standard deduction for single filers without dependents.
There There are separate, more favorable tax brackets available for heads of households.
ImportantlyThe Internal Revenue Service They won’t automatically consider you a single parent to determine if you are eligible for head of household status. You’ll You may need to manually verify a box by yourself, or tell your tax preparer.
If If you are married and pay more than half the child’s expenses, then you may also be considered a head household member. However, this is only if your spouse files separately.
How How much tax do you earn for your child in 2022?
GenerallyPeople believe that having children will lower their tax bill and result in a higher refund. But In many cases it is dependent on your income. LowerAfter having or adopting children, -income taxpayers generally qualify for greater tax deductions and credits. Jim DanielsCPA, managing director at UHY. Advisors, a tax and consultancy services firm.
Adoption Credit for tax
If If you adopted a child between 2022 and 2023, you might be eligible for a credit up to $14,890 per child for adoption-related expenses. This This could include travel expenses and attorney fees related to adoption. Continue reading.
To Your modified adjusted gross must be lower than your adjusted gross to claim the full credit. After that, the credit phases out and is not available for people who had a modified gross adjusted income of $263,410.
The Credit is not refundable. This means that if you don’t owe any taxes you won’t have the right to claim the credit. HoweverYou can move it forward for up to five years to reduce tax liability in the long-term.
Child Tax Credit For 2022
If you became a parent in 2022, you could qualify for the Child Tax Credit If you have an adjusted income of less $200,000 or $400,000, you can file a joint return.
The maximum tax credit per qualifying child you could receive for a child born last year went down to $2,000 from $3,600 for children five and under — or $3,000 for children six through 17 years old. AdditionallyYou can’t get a percentage of the credit in advance like last year.
Tax Credit for childcare expenses
If If you’re employed and you pay for childcare services, then you might be eligible for the dependent care credit.
If If your adjusted gross income was less than $43,000 last year, you may be eligible for a tax credit of up to $3,000 that you have spent on childcare.
In You may receive tax documentation from the child’s service in certain cases. Karls. But If you don’t have the information, gather it as soon as you can to prove that you were paid for childcare.
“You can usually recreate the expense anyway if you paid using a credit card or a check,” Daniels. Typically You don’t need to submit any very detailed documentation to claim credit, unless your return has been audited. Timothy SpeissTax partner in the Personal Wealth Advisors Group at EisnerAmper LLP.
But It’s still a smart idea to save receipts for any expenses that you don’t think are tax deductible.
Earned Credit for income
Having You could be eligible for the if you have a child Earned Income Tax Credit. If you have one child and your adjusted gross income was $43,492 if you’re filing a return alone, or $49,622 if you’re filing a joint return with a spouse, you could claim up to $3,733 in a refundable tax credit. This means that even if you don’t owe any taxes for 2022, you could receive $3,733.
Make Withholding adjustments for your W-4
FinallyIf you don’t have one, fill it out. This This will reduce the amount of the refund you receive next year, but it will increase the size your paychecks going forward because less money will be withheld. Daniels said.
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can FFollow her on Twitter @BuchElisabeth Register for our Newsletter Daily Money Newsletter Here