Tax Question re: adding LO as a dependant

EvenAngelsFall · October 2011

I currently have the max amount taken out of my paycheck, so I usually get a pretty nice refund at tax time. I have to claim zero dependents to do this. Once LO comes, am I *required* to change that and add him as a dependant? I don?t want to end up owing, but I also don?t want to do anything illegal. Anyone know anything about this?

Julia_JJ · October 2011

You don't have to change anything on your withholdings - you can even withhold at the single rate (which is what we do to cover my side income so I can avoid messing with quarterly taxes). All the IRS cares about is how much you pay at the end.

iluvmylab · October 2011

No, you don't have to add. Worst case, they take out too much and you get a bigger refund. If you are good with money though, you are better off taking in more income and investing it yourself. Why give the government a free loan if you don't have to! I will claim 1 on mine, but DH will leave his as is.

EveryNameIWantIsTaken · October 2011

You are not required to claim anything if you do not want to. We claimed 0 even after ds was born until I stopped working. We only changed it then because we needed the money throughout the year and we still end up with a nice return.

nahokulele · October 2011

Julia_JJ:
You don't have to change anything on your withholdings - you can even withhold at the single rate (which is what we do to cover my side income so I can avoid messing with quarterly taxes). All the IRS cares about is how much you pay at the end.

This. I'm a CPA--PP is correct, you don't have to do anything about your withholding--you could even claim zero if you really wanted to be conservative. When you complete your 2010 tax return (assuming LO is born in 2011), you'll get an extra exemption--one for you, one for DH and one for your new addition. I think the 2011 exemption is going to be $3700 each. For 2010, it's $3650 each.

EvenAngelsFall · October 2011

nahokulele:

Julia_JJ:
You don't have to change anything on your withholdings - you can even withhold at the single rate (which is what we do to cover my side income so I can avoid messing with quarterly taxes). All the IRS cares about is how much you pay at the end.

This. I'm a CPA--PP is correct, you don't have to do anything about your withholding--you could even claim zero if you really wanted to be conservative. When you complete your 2010 tax return (assuming LO is born in 2011), you'll get an extra exemption--one for you, one for DH and one for your new addition. I think the 2011 exemption is going to be $3700 each. For 2010, it's $3650 each.

Thanks... this was all really helpful!

I like the idea about investing on the side too!

haleymay18 · October 2011

No. You're not required to do anything like that. Its your prerogative if you want to claim 0 or 75.

Rebecca2024 · October 2011

nahokulele:
This. I'm a CPA--PP is correct, you don't have to do anything about your withholding--you could even claim zero if you really wanted to be conservative. When you complete your 2010 tax return (assuming LO is born in 2011), you'll get an extra exemption--one for you, one for DH and one for your new addition. I think the 2011 exemption is going to be $3700 each. For 2010, it's $3650 each.

So... not looking for free advice or anything, so please don't feel obligated to offer any.

My husband and I went to a tax professional (a guy that has been in business many years, not a hole in the wall only there during tax season type) for 2010's taxes. We got married in January and bought a house in March; we just figured it would be easier to have a professional do our taxes for last year.

We mentioned to the tax guy that we were anticipating starting a family this year (not expecting to file for baby until 2012 taxes) and he said something along the lines that we would only get back about $50 because of our income level.

Maybe I misunderstood him??

Every "normal" (not accountant or tax professional) person that I've talked to since becoming pregnant seems to think this is ridiculous.

Are you able/willing to point me to some tax code that I could read up on to understand what this man is talking about?
Or questions I can ask him to make sure he does in fact know what he's talking about?

I would appreciate it; thank you.

JamaicaMon! · October 2011

Rebecca2024:

nahokulele:
This. I'm a CPA--PP is correct, you don't have to do anything about your withholding--you could even claim zero if you really wanted to be conservative. When you complete your 2010 tax return (assuming LO is born in 2011), you'll get an extra exemption--one for you, one for DH and one for your new addition. I think the 2011 exemption is going to be $3700 each. For 2010, it's $3650 each.

So... not looking for free advice or anything, so please don't feel obligated to offer any.

My husband and I went to a tax professional (a guy that has been in business many years, not a hole in the wall only there during tax season type) for 2010's taxes. We got married in January and bought a house in March; we just figured it would be easier to have a professional do our taxes for last year.

We mentioned to the tax guy that we were anticipating starting a family this year (not expecting to file for baby until 2012 taxes) and he said something along the lines that we would only get back about $50 because of our income level.

Maybe I misunderstood him??

Every "normal" (not accountant or tax professional) person that I've talked to since becoming pregnant seems to think this is ridiculous.

Are you able/willing to point me to some tax code that I could read up on to understand what this man is talking about?
Or questions I can ask him to make sure he does in fact know what he's talking about?

I would appreciate it; thank you.

A lot of factors come into play when it comes to tax code and claiming children. First, if he seems to think you're only likely to get $50 back in your pocket, my first guess is that you probably have a pretty high income. Would that be correct? If so, that will disqualify you from several credits that other people get who have much lower incomes. When we had our son last year, we barely saw any increase in our refund because of it.

Plus, typically, one child doesn't make a huge dent in your tax bill. When you start having more and more children, that's when you start to see more money back in your pocket. Also, if you end up putting your child in daycare and using a flexible spending account through work to get the pre-tax benefits of dependent care, you won't see as much back on your taxes because of it. That's because the benefit you're getting is with pre-tax dollars. Still a savings, but not one you will see come tax time.

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