Child credit on taxes? Childcare credit?

Question

How will our baby's arrival affect our tax status?
You can claim a new dependent on your income tax form. (It's best to get your baby a Social Security number as soon as possible after birth.) What's more, you'll be eligible for a child credit and possibly a childcare credit.

I found that on babycenter.com. What are those?

Answer 1

Provided the baby is born on or before Jan 1, 2008 you are eligible for several benefits on your 2007 form 1040. If born later you get nothing for 2007.

So, PUUUUUUUUUUSH!!!!!!!

First, the child must be your dependent to get any of the tax benefits we're discussing, so we will so assume. SO, first you will get a deduction from income of $3300.


Child care credit is a non-refundable credit which means that after you figure income tax, the credit will reduce tax to zero. Any extra credit is lost. The credit is a percentage of your eligible child care expense (must have been spent to allow you/spouse to work or go to school). The percentage decreases as income increases.

Child Tax Credit is REFUNDABLE. That means if tax is reduced to zero and thre is still unused credit, you can calculate to see if you qualify for the Additional Child Tax Credit. Briefly, this is too complicated to describe here, but if you do qualify, it gives you more money back than you paid in.

Good Luck & Congratulations!

Answer 2

childcare credit is a tax break for money you spend on a babysitter. the catch is that you need to report the babysitters tax id or ssn on your taxes in order to take the credit. If you send your child to a day care center, that won't be an issue. If you want to pay somebody less per day/hour under the table than a day care center will charge, then you can get the babysitter in trouble with the IRS if they don't report the income. The amount of the credit you get to take is based on your income level.

The child credit is a deduction you get to take for having a child under 18 and you can only take it if your income falls within a certain value. I don't recall the exact details.

Answer 3

If you are putting your child into nursery or a child minder then you will have to ensure that the childminder or nursery is registered. Speak to the child minder / nursery and find out how much it will cost you for them to care for your child. Get their registered number and just give the tax credit people a call. Along with how much you are going to be earning they will work out how much you are entitled to and will set it up for you. Check with your employers as some employers will allow you to buy child care vouchers from them which comes from your salary and you are not taxed on that money.