First of all, there is more than one way to "have" a baby. And that can affect your tax liability."Also, there's a $13,000 credit for adoption and this helps you defer the cost and expense if adopting a child," said Bob Yee, Central Pacific vice president. "You may also qualify for the child care credit and for the child exemption as well."
When the new baby comes, one of the first things you should do is let your employer know.
"You need to make sure you contact your benefits person at your employer," said Yee. "And it's important for you to make sure you contact your health care provider, to make sure you understand what's covered and what isn't covered for your baby."
And Yee says it's not a bad idea to be looking down the road when that baby comes into the world, looking at college for the little tyke.
"Most families start fretting about the college expense when their kids hit high school," Yee explained. "And the cost of college expense nowadays is so high, you really have to start planning when they're born. Luckily there are two plans available that will help you that have tax advantage."
One is the "529" that allows up to $250,000 to be put into a special fund over time. The dollars earn interest tax free and if withdrawals are spent on college costs, no tax there, either. The other plan is the Coverdale plan which allows $2,000 dollars a month to be placed into a college savings account. Ask your banker about the advantages of both plans.
