Becoming a parent, whether it's through giving birth, surrogacy, or adoption, is a life-changing experience, and with that change comes a host of new tax matters to understand.
While filing taxes may not be at the top of your list right now, especially when you're sleep-deprived, the law requires you to prepare your tax return.
To help make the process smoother for you, this guide explains some of the most important federal tax benefits, credits, and rules in 2025.
Social Security Benefits for Children
If you've recently had or adopted a child, it's a good idea to get a Social Security number for them as early as possible. A valid Social Security number is usually required for various benefits and tax credits.
For instance, children may be entitled to Social Security benefits if a parent is retired, disabled, or has passed away. Qualifying children can receive up to 50% of a parent's retirement or disability benefit or up to 75% of a deceased parent's Social Security benefit. Benefits typically stop once your child reaches age 18 unless the child is still in high school (in which case benefits can last until two months after turning 19) or has a qualifying disability that began before age 22.
New parents can usually apply for this document at the hospital after their baby is born. However, if you haven't gone through the process, you can do so through this website.
The Social Security Administration would need to verify your child's birth certificate and identity before providing them a number. The process could take some time, so it may be beneficial for you to file for a six-month tax extension while verification is underway.
Filing as Head of Household
When you have a child and you're unmarried, you may be eligible to file as Head of Household. This filing status usually offers a higher standard deduction (around $21,900) and more favorable tax brackets than filing as a Single ($14,600).
To qualify, you generally need to:
- Be unmarried (or considered unmarried) at the end of the tax year.
- Pay more than half the household costs for you and the qualifying child for the year.
- Ensure the qualifying child lives with you for at least half the year.
Adoption Tax Credit
Adopting a child can be expensive, and the federal government offers an Adoption Tax Credit of up to $16,810 to help offset certain qualified costs. The credit covers costs such as adoption fees, court expenses, attorney fees, and other necessary adoption-related fees.
The credit is not refundable, meaning it can bring your tax bill down to zero, but you generally will not receive a refund for any excess. However, you can carry forward any unused amount for up to five years.
Child and Dependent Care Credit
If you're paying for child care so you can work or look for work, you may qualify for the Child and Dependent Care Credit. Here are a few key points:
- You can typically claim a percentage of your eligible child care expenses, up to $3,000 for one child or $6,000 for two or more children.
- The credit percentage is generally between 20% and 35%, depending on your income.
- To claim the credit, you must provide the name, address, and tax ID number (or Social Security number) of your care provider.
Earned Income Tax Credit Qualifications
The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families. Specifically, the EITC is for filers with one child and an adjusted gross income of $49,084 (single) or $56,004 (joint filers) in 2024. The credit may amount to up to $4,213 in refundable tax credit.
Updating Your W-4 Form
If you started a new job or experienced a big life change, like having a baby, you might need to adjust your tax withholding on Form W-4. This is to make sure your documents indicate that you now have a dependent.
