First of all, congrats. Having a baby is a Big responsibility. The IRS recognizes that fact by giving tax breaks for parents. The first is an additional exemption for the family. Exemptions tend to reduce the tax liability of the taxpayer by reducing reported taxable income. Other tax help comes from the credit for child and dependent care, increased earned income credit (EIC), and, among others, the child tax credit ($1,000 until 2010 by congressional legislation). Keep in mind the EIC is a refundable credit, which means that if your taxes are zero, it can still generate a refund. Also, if the child tax credit is zero, there is the refundable 'additional child tax credit'. If you adopted a child, there is a chance you could take a credit for expenses incurred during previous years, before the adoption became final. However, there are no retroactive credits or deductions to take in a previous year for a baby born in a given year. Again, congrats and good luck!!
