KANSAS CITY, MO. -- The following is a message from H&R Block:
It may be the first baby of theyear who grabs the media headlines, but it's the last baby of the year who yields the tax savings. Babies born before the stroke of midnight this New Year's Eve could save their parents thousands on their 2008 returns.
"Mere mintues can mean major tax savings this New Year's Eve," said Sandy Lichon, District Manager. "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."
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.
The "Child Tax Credit" is worth as much as $1,000 per child, regardles of whether taxpayers file as single or jointly. To qualify, parents must have earned income of at least $8,500. And, even parents without tax liability may 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. EITC is also a refundable credit so it can reduce a taxpayer's liability below $0, resulting in a refund.
For future years, taxpayers who pay someone to look after their baby while they work or look for work may quaify for the "Child Care Credit." Income limitations apply to this tax benefit so a tax or financial professional should be consulted about indiviudal tax situations.
