Late arrival saves money on taxes
January 26, 2010 · 12:30 PM
ARLINGTON — Branden and Whitney Brown knew their newest addition to the family was special, but they didn’t know that she’d save them money on their taxes.
“We got a call while we were at the hospital from H&R Block,” said Branden Brown. “We had no idea at all.”
Although the first baby of the year tends to grab the newspaper headlines, it’s the last baby of the year that gets the tax savings, according to H&R Block representatives.
Babies born before midnight on Dec. 31, such as the Browns’ newborn Kendra Renae Brown, earn tax exemptions, said Lynn Pattison, franchisee of the Arlington H&R Block.
“Mere minutes can mean major tax savings this New Year’s Eve,” Pattison said. “Babies born on Dec. 31 provide parents with a retroactive tax exemption for all of 2008. To get that same tax break, parents of babies born after midnight on Jan. 1 will have to wait until they file their 2009 taxes — in 2010.”
Kendra Brown was born at Cascade Valley Hospital on Dec. 30 at 4:52 p.m.
In addition to an exemption worth $3,500 in 2008, new parents may qualify to claim two other credits that could further reduce this year’s tax liability, Pattison said.
The Child Tax Credit is worth as much as $1,000 per child, regardless of whether taxpayers file as a single or jointly. To qualify, parents must have earned income of at least $8,500.
Parents without any tax liability may also be eligible for this refundable credit.
The Earned Income Tax Credit is available to lower-income workers. The amount of the credit varies with income, the number of qualifying children and whether a single or joint return is filed.
The credit is also a refundable credit, so it can reduce a taxpayer’s liability below $0, resulting in a refund, Pattison said.
Additionally, taxpayers who pay someone to look after their child while they work or look for work may qualify for the Child Care Credit. Income limitations apply to this tax benefit, so a tax or financial professional should be consulted about individual tax situations, she said.
Pattison presented the Smokey Point family a goody bag full of diapers, a changing pad, a rubber ducky, wipes and a certificate for free tax preparations.
The family also received a baby-sized T-shirt that reads “I’m a new tax deduction.”