Tax Benefits for Baby Expenses
Many 401K or retirement accounts will allow plan participants to withdraw money when life changes – like when the birth of a child occurs. Remember that you will have to pay taxes on the amount withdrawn. If you can avoid doing this, then do so at all costs. On the flip side, opening up a savings account for your child for educational purposes can serve as a tax break as well. You are able to write off certain types of accounts on your taxes as long as you do not withdraw from them. Roth IRA’s and path to college accounts all yield varying gains and differ from state to state. It is an adequate way to disguise baby expenses in order to get repaid come tax time.
Sadly, there aren’t a lot of financial gains when it comes to having children. It is a decision based on your heart, rather than your checkbook. Still, planning wisely and making sure that you take advantage of every tax break available to you as a parent is vital. The first year it is definitely wise to allow a trained preparer to take over your taxes so they will be able to get you the proper amount of deductions and benefits.