How to Claim a Newborn on Your Tax Return and Maximize Deductions

 Introduction

Welcoming a newborn into your family comes with financial responsibilities, but it also provides valuable tax benefits. Parents can claim their newborn as a dependent, reducing their taxable income and qualifying for child-related tax credits.

This guide explains how to claim a newborn, what tax benefits apply, and how to maximize deductions for new parents.

 Tax Code References for Claiming a Newborn (IRC § 152 & § 24)

• IRC § 152 defines a qualifying child for tax purposes.
• IRC § 24 outlines the Child Tax Credit (CTC) eligibility rules.
• IRS Publication 501 provides guidance on claiming newborn dependents.
• Form 1040 and Schedule 8812 are used to claim the child tax credit and dependents.

Eligibility Requirements for Claiming a Newborn as a Dependent

A newborn child qualifies as a dependent for the entire tax year, even if born on December 31. To claim your child, they must meet the following five IRS tests:

Age Test

• The child must be under 17 years old at the end of the tax year.

Relationship Test

• The newborn must be the biological child, adopted child, or stepchild of the taxpayer.

Residency Test

• The child must live with the taxpayer for more than half the year. A newborn automatically qualifies if they live with the parents after birth.

Support Test

• The child cannot provide more than 50% of their own support.

Citizenship Test

• The child must be a U.S. citizen, U.S. national, or U.S. resident alien.

 Tax Benefits of Claiming a Newborn

5. Steps to Obtain a Social Security Number (SSN) for Your Newborn

To claim a newborn as a dependent, parents must obtain a Social Security Number (SSN).

Step 1: Apply for an SSN at the Hospital

• Most hospitals provide Form SS-5 (Application for a Social Security Card) at birth.

Step 2: Gather Required Documents

• Birth certificate
• Proof of parent’s identity (driver’s license or passport)

Step 3: Submit Application to the Social Security Administration (SSA)

• If not applied for at birth, visit the SSA office or apply by mail.

  Maximizing Deductions and Credits for a Newborn

1. Claim the Child Tax Credit (CTC)

• Parents can claim $2,000 per child, with $1,600 refundable through the Additional Child Tax Credit (ACTC).

2. Qualify for the Earned Income Tax Credit (EITC)

• Low-to-moderate-income taxpayers can receive up to $7,830.

3. Deduct Medical Expenses for the Birth

• If medical expenses exceed 7.5% of AGI, parents can deduct labor and delivery costs, prenatal care, and newborn medical expenses.

4. Use the Child and Dependent Care Credit

• Parents who pay for childcare while working can claim up to $3,000 per child ($6,000 max for two children).

  Example Scenarios for Claiming a Newborn

Example 1: Married Couple with a Newborn

• Jack and Sarah had a baby in December 2024.
• They qualify for the Child Tax Credit ($2,000) and Earned Income Tax Credit ($4,000).
• Since their baby was born in 2024, they claim the full-year dependent benefits.

Example 2: Single Parent Qualifying for EITC

• Lisa, a single mother, had a baby in June 2024.
• She earns $35,000 per year and qualifies for:
• $2,000 Child Tax Credit
• $5,400 Earned Income Tax Credit
• $1,500 Child and Dependent Care Credit

Example 3: Parents Paying High Medical Costs

• Tom and Emily’s newborn had medical complications requiring hospitalization.
• They paid $12,000 in medical expenses and itemized deductions.
• Their AGI is $80,000, meaning expenses over $6,000 (7.5% of AGI) are deductible.
• They claim a $6,000 medical deduction.

 Step-by-Step Guide to Claiming a Newborn on Form 1040

Step 1: Obtain an SSN for the Child

• The IRS requires a valid SSN to claim child tax benefits.

Step 2: Report the Newborn as a Dependent on Form 1040

• List the child’s name, SSN, and relationship to the taxpayer.

Step 3: Claim the Child Tax Credit and Other Benefits

• Use Schedule 8812 for the Additional Child Tax Credit (ACTC).

Step 4: Consider Itemizing Medical Deductions (if applicable)

• Report medical expenses exceeding 7.5% of AGI on Schedule A.

  IRS Compliance Requirements

• Ensure accurate reporting of the newborn’s SSN.
• Maintain birth records and financial documents.
• Verify eligibility for refundable credits to avoid IRS audits.

  Conclusion

Claiming a newborn on your tax return provides significant financial benefits, including the Child Tax Credit, Earned Income Tax Credit, and Child and Dependent Care Credit. Ensuring IRS compliance and maximizing deductions can reduce tax liability and increase refunds.

For personalized tax planning, consult Anshul Goyal, CPA EA FCA, a Certified Public Accountant and IRS compliance expert.

 FAQs

1. Can I claim my newborn if they were born on December 31?
Yes, even if your child was born on December 31, they are considered a dependent for the entire tax year and qualify for all child-related tax benefits.

2. What if my child doesn’t have an SSN before the tax deadline?
You must apply for an SSN as soon as possible. If the SSN is not available before the tax deadline, you can file for an extension until the SSN is issued. The IRS does not allow child tax credits without a valid SSN.

3. Can I claim the Child Tax Credit if my newborn does not live with me full-time?
Yes, as long as the child lived with you for at least half the year. However, if another parent shares custody, only one parent can claim the credit based on the IRS custodial parent rule.

4. Can I claim my newborn if I am unmarried?
Yes, being unmarried does not affect your ability to claim a newborn. However, only one parent can claim the child on their tax return each year.

5. What if my newborn was in the hospital for a long time?
A temporary hospital stay does not impact the residency requirement. Your newborn still qualifies as a dependent as long as they were part of your household upon discharge.

6. Can I claim both the Child Tax Credit and the Earned Income Tax Credit (EITC)?
Yes, if your income falls within the EITC eligibility limits, you can claim both credits for additional tax savings.

7. Can I claim medical expenses related to childbirth?
Yes, if you itemize deductions, you canclaim childbirth-related medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI).

8. Do I have to wait until my baby has a name to apply for an SSN?
Yes, the baby’s name must be registered on the birth certificate before applying for a Social Security Number (SSN).

9. Can I claim the Child and Dependent Care Credit if I hire a babysitter for my newborn?
Yes, if you pay for childcare while working or attending school, you may claim the Child and Dependent Care Credit (up to $3,000 per child or $6,000 for two children).

10. Can I claim my newborn if I am a single parent but do not work?
You can still claim your child as a dependent, but you may not qualify for refundable credits like the Earned Income Tax Credit (EITC) if you do not have earned income.

  About Our CPA

Anshul Goyal, CPA EA FCA, is a Certified Public Accountant (CPA) in the United States, a licensed Enrolled Agent (EA) admitted to practice before the IRS, and a cross-border tax expert specializing in U.S. tax compliance.

With over 10 years of experience, he has successfully assisted U.S. taxpayers, expatriates, business owners, and Indian residents in navigating complex tax laws, deductions, and credits.

As a tax strategist and compliance expert, Anshul Goyal helps clients:

• Claim the correct tax credits and deductions.
• Ensure IRS compliance for newborn dependents and family tax benefits.
• Resolve tax disputes and avoid penalties.

For professional tax planning, consultation, and filing assistance, schedule a meeting with Anshul Goyal, CPA EA FCA, to ensure maximum tax savings and compliance.