First of all, congratulations on your new little bundle of joy! Welcoming a baby is life-changing in so many beautiful ways. While you're adjusting to new routines, sleepless nights, and endless snuggles, don’t forget that your new addition also brings a few financial perks—especially when it comes to tax season.
Here’s how having a baby in 2024 could impact your tax return and even increase your refund:
✅ 1. Child Tax Credit (CTC)
One of the biggest benefits of becoming a parent is the Child Tax Credit. For 2024, you may be eligible for up to $2,000 per qualifying child. This credit directly reduces the amount of tax you owe, and in some cases, a portion of it may be refundable, which means more money in your pocket.
✅ 2. Earned Income Tax Credit (EITC)
If your household income falls within certain limits, adding a child to your return could significantly increase your Earned Income Tax Credit—worth up to $7,430 for qualifying families. This is one of the most overlooked credits, and it’s fully refundable. So, even if you don’t owe taxes, you may still receive this credit as part of your refund!
✅ 3. Dependent Care Credit
Did you pay for childcare in 2024 so you could work or look for work? You might qualify for the Child and Dependent Care Credit. This credit helps offset daycare, babysitter, or preschool costs and can be worth up to $1,050 per child (and even more if you have multiple children in care).
✅ 4. Update Your W-4
With a new dependent, you might want to adjust your tax withholdings by submitting a new W-4 form to your employer. This can increase your take-home pay in 2025 by reducing the amount withheld for taxes each paycheck. It’s a small adjustment that could have a big impact throughout the year.
✅ 5. Medical Expense Deductions
Those hospital bills, prenatal visits, and delivery-related expenses can add up fast! If your out-of-pocket medical expenses exceed 7.5% of your adjusted gross income, you may be able to deduct a portion of those costs—especially if you itemize your deductions.
Don’t Leave Money on the Table!
Tax credits and deductions for new parents can make a huge difference in your refund or reduce what you owe. At Puma Accounting, we’re here to help you find every credit you qualify for and make tax season as stress-free as possible.
