Raising a Child: Frequently Asked Questions
Children bring joy and added expenses. They also bring tax benefits that can ease the cost, if you understand how to claim them. Here are answers to common questions.
Can I claim my child as a dependent?
Generally a child qualifies if they meet tests for relationship, age, residency, support and joint return. A child usually must live with you for more than half the year. The details, and how they apply to students and children with disabilities, are explained at irs.gov.
What tax credits are available?
Depending on your income and circumstances, you may qualify for the child tax credit, the child and dependent care credit, the earned income tax credit and education credits as your child grows. Amounts and income limits change, so check current figures or ask us.
Does my child need a Social Security number?
Yes, to be claimed as a dependent. You can apply for one at the hospital when the birth certificate is filed or later through the Social Security Administration. See ssa.gov.
How do child care costs affect my taxes?
If you pay for care so that you can work or look for work, you may claim a credit for part of the cost. Your employer may also offer a dependent care account that lets you pay with pre-tax dollars. You generally cannot double count the same expenses between the two.
Should I save for college?
Starting early gives savings more time to grow. A 529 plan allows tax-free growth when withdrawals are used for qualified education expenses, and Georgia residents may have a state tax benefit for contributions. Check the rules for the plan you choose.
Do I need to update my withholding and insurance?
Yes. A new child can change your tax situation, so review your Form W-4. Also add the child to your health plan within the enrollment window, review life and disability insurance, and name guardians in a will.
Can my child have a bank or investment account?
Custodial accounts let you save for a minor. Income from a child's investments may be taxed in different ways depending on the amount and the child's age, so ask us before setting one up.
Should my child file a tax return?
A child with earned or investment income above certain thresholds must file, and sometimes it is useful to file even if not required, to claim a refund of withheld tax.
Welcoming or raising a child? Learn about our tax planning or contact us to review your plans.
This article is general information, not tax, legal or investment advice for your specific situation.