Checklist · 3 min read
New baby tax checklist
A new baby changes your taxes for the whole year they are born, even if they arrive on December 31. Here is what to do in the first few months.
- Who it fits
- New and expecting parents.
- Figures
- 2026 tax year
The key rule
Your child needs a Social Security number by the due date of your return to claim the child tax credit.
How it works
Tax benefits that can apply in the birth year:
- Child tax credit: up to $2,200 per child under 17, phasing out above $200,000 of income ($400,000 joint).
- Dependent care: a dependent care FSA, or a credit for childcare costs if you do not use one.
- Head of household status for single parents, with lower rates and a bigger standard deduction.
- Adoption credit for qualifying adoption costs.
7 steps
Apply for a Social Security number
Usually done at the hospital with the birth certificate application.
Update your W-4
A new dependent may lower the withholding you need.
Use a dependent care FSA
From 2026 you can set aside up to $7,500 pre-tax for childcare through your employer. Enroll within 30 days of the birth.
Add the baby to your health plan
You usually have 30 days after the birth to add the baby to your insurance.
Open education and investment accounts
Consider a 529 plan and a Trump account.
Update your will and beneficiaries
Name guardians and update 401(k), IRA and life insurance beneficiaries.
Keep childcare records
The provider's name, address and tax ID are needed for the FSA and any credit.
Common mistakes
- Missing the 30-day window to change benefits at work.
- Paying a nanny without setting up household payroll once wages pass the threshold for the year.
Key dates
- Within 30 days of birth
- Health plan and FSA changes.
- Before your return is due
- Child needs a Social Security number.
Questions we hear
Do I need to run payroll for a nanny?
Usually, yes. Above a small annual threshold, household employers owe Social Security and Medicare tax and must issue a W-2. We can help set it up.
Can I open a 529 before the baby has a Social Security number?
Some plans let you open it with yourself as beneficiary and change it later.
What to send us
- Child’s Social Security number
- Childcare receipts and provider tax ID
Upload them to your client portal.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.