levy navigator for recent parents: kid levy capitalization, Earned income, Social safety and more

If you had or adopted your first kid in 2024, filing your taxes may not be a top priority. Yet, even if you’re sleep-deprived and haven’t left your home in months, the law says you still must prepare a profitability in 2025.

With a recent kid, your taxes will get more complicated. On the flip side, however, you may qualify for several recent levy credits and deductions. 

Here’s what recent parents require to recognize for the 2025 levy period and beyond:

Get a Social safety card for your kid

The first order of business is to make sure your kid has a Social safety number, said John Karls, a levy associate at Armanino, a national levy advisory firm. “You can’t claim your kid as a dependent on your levy profitability if they don’t have a Social safety number,” he said.

Many parents apply for this document at the hospital when their baby is born.

If you don’t have one for your kid, Karls said, you should apply now. But it could receive a while for the Social safety Administration to verify your kid’s birth certificate and identity, so Karls recommends filing for a six-month levy extension while you wait. 

Head of household position

If you’re a single parent, for levy purposes you are considered the head of the household. That means you could claim a $21,900 standard deduction for levy year 2024, versus a $14,600 standard deduction for single filers without dependents. 

There are also divide, more favorable levy brackets for a head of household.

Keep in mind that the IRS won’t automatically recognize that you’re a single parent and thereby qualify for head-of-household position. You have to check that box or inquire your levy preparer to do it. 

How much do you get back in taxes for a kid?

Generally, people ponder having a kid will lower their levy statement or trigger a larger refund. But in many cases, it depends on a person’s income. Taxpayers with lower incomes are typically eligible for more charitable levy credits and deductions after they have or adopt a kid, said Jim Daniels, a CPA and managing director at UHY Advisors, a levy and consulting services firm.

Adoption levy capitalization 

If you adopted a kid in 2024, you may qualify for a capitalization of up to $16,810 for any adoption-related costs you incurred. The costs could include adoption-related attorney fees, adoption fees and trip costs. You can claim the capitalization across multiple years, but you cannot claim more than $16,810 for a single adoption.

To claim the packed capitalization, your modified adjusted gross income, which is generally close to your adjusted gross income, must be $252,150 or below. If you make more, the capitalization begins to taper out. People with a modified adjusted gross income above $292,150 cannot claim the capitalization.

The capitalization is not refundable: If you don’t owe any taxes, you won’t be able to claim it. However, you can carry it forward to reduce your levy obligation in the upcoming. 

How much is the kid levy capitalization this year? What are the qualifications?

If you became a parent in 2024, you may qualify for the kid levy capitalization if you had an adjusted gross income of less than $200,000, or less than $400,000 if you are filing a joint profitability with a spouse. 

kid and dependent worry capitalization income limit

If you are employed and pay for kid worry services, you may qualify for the kid and Dependent worry capitalization. To qualify as a recent parent, you must have earned income in 2024 and have work-related childcare costs, among other rules. You can seek the capitalization for up to $3,000 of costs for one kid, or $6,000 for two or more children. The actual capitalization is a percentage of those costs. view IRS Publication 503 for the formulas.

Earned income levy capitalization qualifications 

Having a kid could make you eligible for the Earned income levy capitalization. If you have one kid and your adjusted gross income was $49,084 (filing alone) or $56,004 (filing jointly with a spouse) in 2024, you can claim up to $4,213 in a refundable levy capitalization.

Make adjustments to your W-4 withholding 

Finally, make sure to fill out a recent W-4 form with your employer to reflect that you now have a dependent. This will likely lower the refund you get next year, but it will boost the size of your paychecks going forward, Daniels said, because less money will be withheld.

Daniel de Visé covers money management for USA TODAY.