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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.

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.

These new arrivals from the Motherly Shop are *so* good you need them all

Noodle and Boo, Mushie and Plan Toys—everything you need, mama.

Motherhood is hard work—finding great products and brands to make the journey easier doesn't have to be. Each week, we stock the Motherly Shop with brilliant new products we know you'll need and love from brands and makers that really care.

So, what's new this week?

Noodle and Boo: Holistic baby skin care

Through working with chemists who specialize in natural and holistic skin care, Noodle and Boo has developed exclusive formulas that nourish, replenish and protect especially delicate, eczema-prone and sensitive skin—including laundry detergent. Their signature, obsession-worthy scent—which is subtly sweet, pure and fresh—is the closest thing to bottling up "baby smell" we've ever found.

Mushie: Kids' dinnerware that actually looks great

We're totally crushing on Mushie's minimalist dinnerware for kids. Their innovative baby and toddler products leverage Swedish design to marry both form and function while putting safety front and center. Everything is created in soft, muted colors from BPA-free materials.

Plan Toys: Open-ended toys that last

Corralling and cleaning up the toys becomes less stressful when you bring home fewer, better, more beautiful ones. Plan Toys checks all the boxes. Made from re-purposed rubber wood, they're better for the planet as well.

Not sure where to start? Here's what we're adding to our cart:

Mushie silicone baby bib

Mushie silicone baby bib

There's no going back to cloth bibs after falling in love with this Swedish design. The pocket catches whatever misses their mouths and the BPA-free silicone is waterproof and easy to wipe down between uses.

$13

Mushie kids' square dinnerware plate set

Mushie kids' square dinnerware plate set

We're totally crushing on the soft muted colors that flow with our table aesthetics and the thoughtful high-sided design that helps babies and toddler who are learning to feed themselves.

$15

Noodle and Boo nursery essentials kit

Noodle and Boo nursery essentials kit

Stocked with everything a new mama needs to care for her little one's delicate skin, Noodle and Boo's nursery essentials gift set is the perfect way to create a holistic and natural skin care routine from day one.

$45

Plan Toys doctor set 

Plan Toys doctor set

Ideal for quiet time and imaginative role play, we love the gorgeous planet-friendly doctor kit from Plan Toys. The rubber wood stethoscope, blood pressure cuff, thermometer, syringe and reflex hammer pack up neat and tidy into the red cotton case should they need to dash off on a rescue mission.

$30

Noodle and Boo instant hand sanitizer

Noodle and Boo instant hand sanitizer

Since we're buying and using hand sanitizer by the truckload these days, we're thrilled Noodle and Boo has made one we can feel good about using on little ones who cram their hands in their mouths 24/7. Not only does it kill 99.9% of germs, but it also leaves hands moisturized as well.

$10

Plan Toys natural wooden blocks set

Plan Toys natural wooden blocks set

A toy box isn't complete without a set of blocks—and this set is one of our new favorites. The sustainable, re-purposed wood is eco-friendly, comes at a relatively affordable price point and are certain to last well beyond multiple kids, hand-me-downs and even generations.

$30

Noodle and Boo family fun pack cleansing set

Noodle and Boo family fun pack cleansing set

Because their products were developed for delicate and eczema-prone skin, Noodle and Boo's full line of skin care has become a favorite among those with sensitive skin of all ages. This set is the perfect way to pamper the entire family.

$48

Mushie kids' round dinnerware bowl set

Mushie kids' round dinnerware bowl set

No need to sacrifice safety or design with the sustainable dinnerware from Mushie. Their minimalist, functional dishes are perfect for serving up meals and snacks to your tablemates who might hurl it to the floor at any point. They're made in Denmark from BPA-free polypropylene plastic mamas can feel good about and dishwasher and microwave-safe as well.

$14

Plan Toys geo stacking blocks

Plan Toys geo stacking blocks

The best engaging, open-ended toys are the ones that are left out and available, inviting little (and big!) ones to play. These beautiful gem-like blocks make for addicting coffee table play for the entire family.

$30

Plan Toys wooden green dollhouse

Plan Toys wooden green dollhouse

Energy-efficient design isn't just for grown-up real estate. This green dollhouse includes a wind turbine, a solar cell panel, electric inverter, recycling bins, a rain barrel, a biofacade and a blind that can adjust the amount of sunlight and air circulation along with minimalist furniture we'd totally love to have in our own houses.

$250

We independently select and share the products we love—and may receive a commission if you choose to buy. You've got this.

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Why do all of my good parenting or baby-focused inventions come after they've already been invented by someone else? Sigh.

Like the Puj hug hooded baby towel, aka the handiest, softest cotton towel ever created.

Safely removing a wet, slippery baby from the bath can be totally nerve-wracking, and trying to hold onto a towel at the same time without soaking it in the process seems to require an extra arm altogether. It's no wonder so much water ends up on the floor, the countertops, or you(!) after bathing your little one. Their splashing and kicking in the water is beyond adorable, of course, but the clean up after? Not as much.

It sounds simple: Wash your child, sing them a song or two, let them play with some toys, then take them out, place a towel around them, and dry them off. Should be easy, peasy, lemon squeezy, right?

But it hasn't been. It's been more—as one of my favorite memes says—difficult, difficult, lemon difficult. Because until this towel hit the bathtime scene, there was no easy-peasy way to pick up your squirming wet baby without drenching yourself and/or everything around you.

Plus, there is nothing cuter than a baby in a plush hooded towel, right? Well, except when it's paired with a dry, mess-free floor, maybe.

Check out our favorites to make bathtime so much easier:

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Two weeks. I cannot believe that it has been two weeks since my second son was brought into this world. Two weeks since my husband and I welcomed baby Simon, the final piece of our little family.

But, here is the whopper: It has been two weeks since I have been the mom of a toddler and a newborn. I am now responsible for taking care of two tiny humans.

It absolutely blows my mind how much my life has changed in the last two weeks. It's definitely not all rainbows and unicorns around here, but things are going pretty well. This is me being cautiously optimistic.

What I have done is learned a lot about myself, my kids and my new life in the last two weeks.

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