Your growing family could pay off via several tax credits. The great thing about tax credits is that they reduce your tax liability on a dollar-for-dollar basis. A credit of $500 could cut your $1,000 tax bill in half. If you owe no tax, some credits even will get you a refund.
The easiest child-related credit to claim is called simply that, the child tax credit. There are no records to keep or extra forms to file in order to get a $1,000 credit for each child younger than 17 who's claimed as a dependent on your tax return.
If you claim tax relief for more than one kid, you must fill out Form 8812 to compute the additional child tax credit, but the paperwork could well be worth it. This tax break allows filers who owe little or no taxes to get a refund check from the IRS.
Working parents who put the kids in day care can file for the child- and dependent-care credit to recoup some of those costs -- up to $3,000 spent to care for one youngster under age 13, and $6,000 for two or more preteens.
And if your child arrived via adoption, there's a tax credit for that, too.