4 Financial Steps to Take After Having Your First Child
If you had a child this year, your taxes are going to be a little different than they were in the past. Here are four steps you should take.
1. Change Your W-4
The first thing you are going to want to do is change your W-4 that is on record with your employer. Be sure to ask your employer if you can file a new W-4. You are going to want to add your child to your W-4. Having a child will change the amount of money that you need to have taken from your paychecks. You should be able to bring home a little more money by changing your W-4 withholdings.
2. Get a Social Security Number for Your Child
Second, you need to apply for a social security number for your child. Some hospitals will help you obtain a social security number for your child, and others do not. Remember that it may take a little while for you to get your child's social security number, so apply as soon as possible once you have your child.
When you file your taxes, you are going to need to provide your child's social security number when you claim them as a dependent.
3. Save All Your Receipts
The year you have a child, you are going to get a lot of medical care. You are going to have prenatal and postnatal visits, as well as the cost of childbirth itself plus all the care that your baby will need with check-ups at the start of their life.
Make sure that you keep track of all of these receipts for all expenses that you have to pay out of pocket for medical care. If you end up paying more than a set amount of your income toward your medical care, you may be able to write off your medical expenses.
4. Start a College Fund for Your Child
It is never too soon to start a college fund for your child. Set up a 529 plan or an Education Savings Account for your child. You are able to deposit a set amount of money each year into these accounts and deduct that money from your taxes. As an added benefit, your child's education money will continue to grow tax-free. If you save up a couple of thousand dollars a year, your child will have a nice savings account when they reach college age.
After you have a child, you need to get a social security number for your child right away so you can declare them as a dependent on your taxes. You need to change your W-4 to reflect your new family size. Save up your medical receipts so you may be able to deduct your medical expenses. Start savings for your child's future; it will help reduce your taxes now and will help your child out in the future. Talk to a certified accountant, such as Hough & Co CPA, to see what other steps you should take as you embark on this new path.