Is there a new baby in the house? That’s good news in many ways, especially at tax time when the chip off the old block will help you chip away at your tax bill.

A growing family makes you eligible for a variety of tax savings. You get an additional exemption, may be eligible for several credits, and can use tax-favored ways to save and pay for Junior’s college. You might even be able to lower your taxes by shifting some of your higher-taxed income to your youngster, either as an asset gift or as salary if you own your own business.

Here are some common tax matters every new — and experienced — mom and dad need to consider.

Filing status

The first tax-return item a taxpayer encounters is the choice of how to file. For many couples raising kids together, this is easy. The married-filing-jointly option offers a larger standard deduction and allows some tax breaks that are denied unmarried filers.

If, however, you are raising children alone, don’t shortchange yourself by choosing the wrong status. You can file as a head of household if, for more than six months, you provided over half the cost of keeping up a home for yourself and your kids. Tax rates and the standard deduction for head-of-household filers are more favorable than those for the single or married-filing-separately categories.

Parents who have lost spouses also have a choice. You may file as a qualifying widow or widower with a dependent child for two years after the year your husband or wife died. This status gives you the same filing consideration afforded married filers. For example, a father whose wife died in 2006 could use this category for 2007 and 2008 returns. (He would have filed as married filing jointly on his 2006 return, the year he lost his wife.) For the subsequent tax years as a qualifying widower, he can use the joint tax rates and, if he doesn’t itemize, claim the highest standard deduction amount.

Exemptions, aka dependents

A prime child-related tax saving comes from the additional personal exemption you claim on your return. The IRS sets a dollar amount (adjusted annually for inflation; it’s $3,500 apiece on 2008 returns) that you multiply by the number of your exemptions. That amount is then subtracted from your income. The lower your income, the lower your tax bill.

Each dependent is an exemption. The IRS has rules on just who qualifies as a taxpayer’s dependent. That’s generally not a problem for parents with young kids at home. But what about when they earn their own money from an after-school job or are off at college? While you may have to do a little figuring, especially to see if your young worker needs to file his own return, this generally won’t invalidate your child’s status as your dependent. The key considerations here are whether you are the child’s primary source of support or if he’s a full-time student at State U.

If you’re filing as a single parent for the first time, other child-related issues arise. Where a formal divorce decree is involved, be sure you follow the custody rules set out there. They determine who gets to claim the children. When custody is shared, parents must decide who claims the children. Often, the dependent deduction is split, with the father claiming one child and the mother the second one. Make sure you and your ex are clear on this so that double dependent claims don’t raise any Internal Revenue Service red flags.

Tax credits

Your growing family also could make you eligible for 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.

Most parents qualify for at least one of three popular credits: the child tax credit, the additional-child tax credit, and the child- and dependent-care credit.

The child tax credit and its companion additional-child tax credit can cut your tax bill substantially for each youngster you claim. For the child tax credit, there are no records to keep or extra forms to file to get a $1,000 credit for each child on your 2008 return.

The credit’s basic requirement is that your child be younger than 17 and claimed as a dependent on your return. You will have to fill out a work sheet to figure out your exact credit amount, especially if you make a lot of money; the credit is reduced for high earners.

If you claim tax relief for more than one kid, you must fill out Form 8812 to compute your 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. This tax break applies to care for children younger than 13, but the precise credit is based on a limited amount of your actual child-care expenses. You can use only up to $3,000 you spent to care for one child, $6,000 for two or more kids.

Another popular tax break helps parents whose bundle of joy arrived via an adoption. Adoptive parents can get up to an $11,650 credit on their taxes to cover expenses. Like parenting, though, claiming the credit is not easy. The exact year you can claim your expenses depends on several factors, including when they were paid, when the adoption was finalized and even whether your new son or daughter is a U.S. citizen or resident.

Education expenses

College costs are skyrocketing, prompting many parents to start saving as soon as the little one arrives. Uncle Sam offers several tax-favored ways to help pay for higher education.

With a Coverdell education savings account, a redesigned version of the old education IRA, parents (or grandparents or even just friends) can put away up to $2,000 per year (total, not apiece) for a youngster’s schooling. While adults contribute to the savings plan, a child age 17 or younger is named as the account’s beneficiary.

The contributions aren’t tax-deductible, but they and their earnings can be withdrawn tax-free as long as they are used to pay eligible schooling costs. And while many of these accounts are opened expressly to pay university costs, Coverdell cash can be used for some pre-college expenses, including tuition, room and board, and books and computers for public, private or parochial primary schools.

Once Johnny or Julie is on campus, Uncle Sam offers a couple of education tax credits to help pay the costs.

The Hope credit can be used for expenses incurred during the first two years of post-secondary education. It can be worth up to $1,800 per student, per year. Graduate and professional-level programs are not eligible.

For additional school years, look to the Lifetime Learning credit, which could cut $2,000 off your tax bill. The credit can be used for undergraduate, graduate and professional degree courses for anyone (including yourself if you want to show your kids that the old parental unit can learn a few things, too!)

Credits usually are more tax beneficial than deductions, but that doesn’t mean you should automatically discount the tuition and fees deduction. This tax break lets you subtract up to $4,000 of eligible schooling costs from your income.

The deduction’s immediate attraction is that it doesn’t require you to fill out Schedule A or meet any percentage-of-income minimum. You’ll find the deduction right on your 1040 (line 34) or 1040A (line 19).

Plus, you can count undergraduate and graduate expenses for your kids even if they aren’t full-time students.

Shifting rules on income shifting

One former child-related opportunity to lower your tax bill, however, has been dramatically reduced. Previously, many parents shifted some of their higher-taxed investment income to their young children so that the earnings would be taxed at a lower bracket, for example, falling from a possible 35-percent rate to the youngsters’ usually 15-percent bracket.

Known as the kiddie tax, the earnings of children 14 or older were taxed at the child’s rate. In 2006, the age limit was increased. A year later, it was hiked again. For tax year 2008 and beyond, a young investor now must be 19 to take advantage of his or her own potentially lower tax rates. Even after the youth turns 19, the kiddie tax still applies to his or her investments if he or she is between ages 19 and 23 and a full-time student.

Under the tougher law, when children 18 or younger have holdings that paid up to $900 in investment income in 2008, that amount is tax-free and the next $900 is taxed at the child’s rate. Any earnings above that are subject to the kiddie tax, meaning the IRS collects on them at the parent’s rate. For 2009, the child’s total tax-free limit increases to $1,900, with the first $950 not taxed and the next $950 taxed at the child’s rate.

So if your child’s earnings are large enough, they are, in essence, added to your taxable income amount. This extra money could push you into a higher tax bracket and could mean the loss (or at least reduced benefit) of some tax deductions and credits that are phased out as income grows.

You can, however, still count on your kids to help lower your tax bill a bit if you own your own business. In this case, by hiring your kids, your company gets a deduction and your child pays income taxes at the youth’s lower rate.

Just remember, the job and wages must be reasonable. If you pay an excessive salary to your 16-year-old for a job he’s not equipped to perform, an IRS examiner is likely to take a closer look. That scrutiny could quickly erase any tax savings you thought you had gained.

Find more tax-filing information and tips in Bankrate’s Tax Guide.