If an unmarried couple living together is having their first child, who should claim them when filing?
For specifics, I am slated to bring home roughly 130k (90k salary, 40k bonus) while she will bring home 105k salary.
Additionally, we purchased our first home in December of 2023 and are both on the mortgage. I have no debt other than the mortgage, while she owes roughly 65k in student loans and approximately 10k toward an auto loan.
Any help would be greatly appreciated. Thanks!
The tax credit is the same regardless of which of you claim the child. The higher earner though would save more with the HOH tax filing status, so most likely the higher earner should claim the child.
How much interest, roughly, do y’all pay on the home a month?
@Ash
Last mortgage payment we paid $2,054 in interest alone.
Flann said:
@Ash
Last mortgage payment we paid $2,054 in interest alone.
Make sure you pay at least slightly more than half of the costs of keeping up the home.
You claim the child and use the standard HOH deduction.
She files as single and most likely will do better itemizing her personal deductions.
If one of you pays more than half of the cost of maintaining the household, that person should claim the dependent and file as Head of Household. If you both share the expenses equally, then you both file as Single and it doesn’t matter who claims the dependent.
@Hart
All the bills for the home come out of my account and then she Zelles me for her portion.
Flann said:
@Hart
All the bills for the home come out of my account and then she Zelles me for her portion.
If she pays you exactly half, you should have her pay less than half this month (before the end of the year) so you can file as Head of Household.
Costs of keeping up the home
Costs you include. Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home.
Costs you don’t include. Don’t include the cost of clothing, education, medical treatment, vacations, life insurance, or transportation. Also don’t include the value of your services or those of a member of your household.
Also, will the child be in paid child care? Does your employer offer a dependent care FSA?
Ash said:
Also, will the child be in paid child care? Does your employer offer a dependent care FSA?
The child will be in paid child care once he’s around 6-8 months. No FSA to my knowledge, but I’ll double-check with my employer.
Ash said:
Also, will the child be in paid child care? Does your employer offer a dependent care FSA?
Take that back, yes my employer does offer Dependent Care FSA with a maximum contribution limit of $5,000.
@Flann
With you claiming the child, you can also utilize tax savings there. By contributing to that, but only to the extent that you know you will have child care expenses for the year.