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Tax deductions and credits for brand-new parents in 2020

If you had a child in 2019, here are the tax tips you need to know about

tax credits and deductions for new parents

While COVID-19 has changed the world for everyone, if you're a new or first-time mama, you already know that your life changed forever in an entirely different way with the arrival of your little one. And your finances changed, too—including how you file your taxes.

Research suggests that a full 50% of new parents wish they had felt more financially prepared prior to the arrival of their first child. But there's still time to build your post-baby financial confidence in time for the extended 2020 tax filing deadline on July 15.

If you had a child in 2019, here are some tax tips, deductions and credits to know about for filing taxes this year.


What tax deductions and credits can new parents get this year?

Your new baby may qualify you for a child tax credit of up to $2,000. The credit is refundable up to $1,400 for taxpayers with earned income of at least $2,500 who have a child under the age of 17 with a Social Security number.

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If your newborn does not have a Social Security number yet, you could still qualify for the $500 credit for other dependents. You will need the child's individual tax identification number or ITIN to claim the credit.

Now that you're a new parent, it is also easier to qualify for the Earned Income Tax Credit (EITC), because the income limitation more than doubles for parents. Depending on your filing status and income, this credit can be worth up to $6,557 for 2019. And because the EITC is a refundable credit, you can still get the credit even if you do not owe and have not paid income taxes.

Will I get an economic impact payment (EIP) for my baby?

Yes. If your baby was born in 2019 and you filed your 2019 taxes before the IRS released your payment, an extra $500 should have been included in your EIP. Otherwise, you can claim the $500 on your 2020 tax return that you'll file next year in 2021. The same goes for a baby born any time in 2020—you can claim the additional $500 on your 2020 return.

Can we get a tax credit for daycare, childcare or medical expenses?

Childcare is one of the biggest expenses for American parents. If you are working or looking for work, you could be eligible to claim the child and dependent care credit for your childcare expenses. Expenses for childcare for children under 13 at day care facilities, in-home centers, before- and after-school programs or from a nanny or babysitter (even day camp!) could qualify. The maximum credit for one child is $1,050, and the credit amount increases for subsequent children.

You should also check what benefits your employer offers. An employer-sponsored dependent care Flexible Spending Account (FSA) allows you to save up to $5,000 pretax to use toward childcare expenses. This means parents in the 24% tax bracket could save $1,200 by fully funding their FSA.

Another big expense that comes with parenthood: Medical bills from all those pediatric visits, trips to the emergency room, prescriptions and other medical expenses. If you have a health savings account (HSA) or a medical FSA, funds from those accounts may be used to pay for qualified medical expenses for your baby.

What do unmarried parents need to do to save money on their taxes?

Families come in all sizes, but the IRS has very specific definitions about who makes up a "tax family." For the growing number of unmarried couples who are co-parenting, this means you can't both claim your new baby as a dependent (and reap the subsequent tax benefits). Instead, as a couple you will need to choose who gets to claim each child and their benefits on your tax returns. Compare results to find the best overall tax outcome for the entire family.

Filing with "head of household" status can give you better tax benefits than filing as "single" would. The head of household status has lower taxes, a larger standard deduction and higher income thresholds for some tax benefits, like the saver's credit.

You can file as head of household if you are unmarried at the end of the year and paid more than half the cost of maintaining a home for more than half the year for a qualifying child or qualifying relative for head of household purposes.

What are the best filing options for new parents?

The best filing option is the one that delivers the right expertise for your unique tax situation. There is not a one-size-fits-all solution. A tax preparer can offer expert help via phone or video conference for any questions you may have about filing taxes as a new parent. If you prefer the DIY approach but have questions, online expert tax support is available.

For new parents who are really strapped for time (and most of us are), H&R Block has the Tax Pro Go service to let you take advantage of expert tax prep by uploading your tax documents online, so you never even have to leave your couch (or nursery). Through the end of June, Tax Pro Go is available at no cost for frontline workers (all police, firefighters, EMTs, and healthcare workers can file both federal and state tax returns for free). Browse around and find what makes the most sense for your needs.

What should new parents watch out for when filing taxes?

Surprises are for birthday parties, not taxes. You should always know what you're going to pay upfront, and if that changes along the way for any reason, you should be notified versus being surprised by your final tax payment.

This post was originally published in February 2020; it has been updated.

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    When wildfires struck the West Coast in September 2020, there was a lot for parents to worry about. For parents of children with asthma, though, the danger could be even greater. "There are more than 400 toxins that are present in wildfire smoke. That can activate the immune system in ways that aren't helpful by both causing an inflammatory response and distracting the immune system from fighting infection," says Amy Oro, MD, a pediatrician at Stanford Children's Health. "When smoke enters into the lungs, it causes irritation and muscle spasms of the smooth muscle that is around the small breathing tubes in the lungs. This can lead to difficulty with breathing and wheezing. It's really difficult on the lungs."

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    Avoid letting your child play outside or overly exert themselves in open air.

    "Unfortunately, cloth masks don't do very much [to protect you from the smoke pollution]," Oro says. "You really need an N95 mask, and most of those have been allocated toward essential workers." To keep at-risk children safer, Oro recommends avoiding brisk exercise outdoors. Instead, set up an indoor obstacle course or challenge your family to jumping jacks periodically to keep everyone moving safely.

    Know the difference between smoke exposure and COVID-19.

    "COVID-19 can have a lot of the same symptoms—dry cough, sore throat, shortness of breath and chest pain could overlap. But what COVID and other viruses generally cause are fever, chills, vomiting, diarrhea and body aches. Those would tell you it's not just smoke exposure," Oro says. When a child has been exposed to smoke, they often complain of a "scrape" in their throat, burning eyes, cough, shortness of breath, chest pain or wheezing. If the child has asthma, parents should watch for a flare of symptoms, such as coughing, wheezing or a tight sensation in their chest.

    Unfortunately, not much is known about long-term exposure to wildfire smoke on a healthy or compromised immune system, but elevated levels of air pollution have been associated with increased COVID-19 rates. That's because whenever there's an issue with your immune system, it distracts your immune system from fighting infections and you have a harder time fighting off viruses. Limiting your exposure to wildfire smoke is your best bet to keep immune systems strong.

    Have a plan in place if you think your child is suffering from smoke exposure.

    Whatever type of medication your child takes for asthma, make sure you have it on-hand and that your child is keeping up with regular doses. Contact your child's pediatrician, especially if your area has a hazardous air quality—they may want to adjust your child's medication schedule or dosage to prevent an attack. Oro also recommends that, if your child has asthma, it might be helpful to have a stethoscope or even a pulse oximeter at home to help diagnose issues with your pediatrician through telehealth.

    Most importantly, don't panic.

    In some cases, social distancing and distance learning due to COVID may be helping to keep sensitive groups like children with asthma safer. Oro says wildfires in past years have generally resulted in more ER visits for children, but the most recent fires haven't seen the same results. "A lot of what we've seen is that the smoke really adversely affects adults, especially older adults over 65," Oro says. "Children tend to be really resilient."

    This article was sponsored by Stanford Children's Health. Thank you for supporting the brands that support Motherly and mamas.

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