The next life event we are exploring is having a baby and how that impacts your tax life. Most parents will tell you that having a child is expensive. According to the U.S Department of Agriculture’s most recent study, the average cost for a middle-income, married couple to raise a child is $233,610. And that is not including potential college expenses. But the good news is you’ll get some relief on your taxes!

A birth on the last day of the year provides a tax benefit for that entire year. After you have a baby, your tax life will change drastically from now on. Tax benefits include:

  • New exemptions
  • Higher deductions
  • Tax credits

In addition to these benefits, our latest COVID-19 Relief Bill blog outlines the additional Child Tax Credit & Childcare Tax Credit that parents may be eligible for in 2021.

Have questions? We are here to help determine the best filing option for your tax situation.