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Cleveland, Ohio – It may be the first baby of the year who grabs the media headlines but according to H&R Block, it’s the last baby of the year who
yields the tax savings. Babies born before the stroke of midnight New Year’s Eve could save their parents thousands on their 2009 returns.
“Mere minutes can mean major tax savings this New Year’s Eve,” said Robyn Fletcher, District Manager Cleveland Metro. “Babies born on Dec. 31 provide
parents with a $3,650 tax exemption for all of 2009. To get that same tax break,
parents of babies born after midnight on Jan. 1, will have to wait until they
file their 2010 taxes – in 2011.”
In addition to the exemption, new parents may qualify for two credits that could
reduce their tax liability even more:
Child Tax Credit:
* A credit of up to $1,000 per qualifying child under 17
* All or a portion of the credit may be refundable, which means if the parents
don’t have any tax liability, they will receive a tax refund for at least part
of the credit.
* The Recovery Act expanded the credit, so that families can begin qualifying
with every dollar earned over $3,000 – down from $8,500 last year. These
changes apply for 2009 and 2010.
Earned Income Tax Credit:
* Designed to help low-income workers continue working, the refundable credit
ranges from $457 for no qualifying children up to $5,657 for three or more
qualifying children.
* Under the Recovery Act, the credit is temporarily expanded to include families
with 3 or more children.
* To qualify, a person’s income must be less than $13,440 with no qualifying
children, $35,463 with one child, $40,295 with two children and $43,279 with
three or more children. If married filing jointly, these amounts increase by
$5,000.
* Investment income must be $3,100 or less for the year.
* The changes to this credit for taxpayers with three or more qualifying
children and for married taxpayers apply for 2009 and 2010.
New parents also can look
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