Polly
02-18-2008, 10:20 AM
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/16/AR2008021602006.html?tid=informbox
Kiplinger.com
Saturday, February 16, 2008; 12:00 AM
The birth of a child guarantees major changes in your lives ... as parents and as taxpayers. Over the years, Congress has peppered the law with tax breaks to help American families. Considering the high cost of child rearing in the 21st century, you'll need all the help you can get.
Get a Social Security number. Your key to tax benefits is a Social Security number. You'll need one to claim your child as a dependent on your tax return. Failing to report the number for each dependent can trigger a $50 fine and tie up your refund until things are straightened out.
You can request a Social Security card for your newborn at the hospital at the same time you apply for a birth certificate. If you don't, you'll need to file a Form SS-5 with the Social Security Administration and provide proof of the child's age, identity and U.S. citizenship.
If registering newborns strikes you as silly, keep in mind that the aim is to prevent taxpayers from claiming dependents they don't deserve (think parakeets and puppies). Apparently it's working. In the first year the government required the numbers, 7 million fewer dependents were claimed than the year before.
Dependency exemption. Claiming your son or daughter as a dependent will shelter $3,400 of your income from tax in 2007, saving you a quick $850 if you're in the 25% bracket. (The exemption will be worth $3,500 on 2008 returns.) You get the full year's exemption no matter when during the year the child was born. Top-earning taxpayers -- those reporting 2007 adjusted gross incomes more than $234,600 on joint returns, $156,400 on individual returns or $195,500 for heads of households -- gradually lose the tax-saving power of exemptions. Those thresholds will increase to $239,950, $159,950 and $199,950 for 2008. Regardless of your income, if you are hit by the alternative minimum tax, exemptions lose all of their tax-saving value...
Kiplinger.com
Saturday, February 16, 2008; 12:00 AM
The birth of a child guarantees major changes in your lives ... as parents and as taxpayers. Over the years, Congress has peppered the law with tax breaks to help American families. Considering the high cost of child rearing in the 21st century, you'll need all the help you can get.
Get a Social Security number. Your key to tax benefits is a Social Security number. You'll need one to claim your child as a dependent on your tax return. Failing to report the number for each dependent can trigger a $50 fine and tie up your refund until things are straightened out.
You can request a Social Security card for your newborn at the hospital at the same time you apply for a birth certificate. If you don't, you'll need to file a Form SS-5 with the Social Security Administration and provide proof of the child's age, identity and U.S. citizenship.
If registering newborns strikes you as silly, keep in mind that the aim is to prevent taxpayers from claiming dependents they don't deserve (think parakeets and puppies). Apparently it's working. In the first year the government required the numbers, 7 million fewer dependents were claimed than the year before.
Dependency exemption. Claiming your son or daughter as a dependent will shelter $3,400 of your income from tax in 2007, saving you a quick $850 if you're in the 25% bracket. (The exemption will be worth $3,500 on 2008 returns.) You get the full year's exemption no matter when during the year the child was born. Top-earning taxpayers -- those reporting 2007 adjusted gross incomes more than $234,600 on joint returns, $156,400 on individual returns or $195,500 for heads of households -- gradually lose the tax-saving power of exemptions. Those thresholds will increase to $239,950, $159,950 and $199,950 for 2008. Regardless of your income, if you are hit by the alternative minimum tax, exemptions lose all of their tax-saving value...