Believe it or not, there is a financial advantage to having a child. You not only gained a loved one, you also gained a dependency exemption you can deduct on your tax return.
Apply for a social security number for your child within a year after his or her birth. That will make the baby “official” in the eyes of the IRS and that’s the first step in getting your deduction.
Who is a Dependent?
There are five requirements that a person must meet to be your dependent.
This person must be a relative or at least have lived in your home as a family member all year.
If the person is married, he or she can’t file a joint return. This probably isn’t a consideration for a newborn.
This person must be a United States citizen, resident alien or a resident of Canada or Mexico.
This person must have a gross income of less than $3,000, unless the person is under the age of 19 or a full time student under the age of 24.
You must have provided more than 50% of the person’s total support for the tax year for which you are taking the deduction.