Which filing status gives us the biggest tax refund with a new baby?

15 In almost all cases, married filing jointly will give you the best tax outcome with a baby. The tax brackets are more favorable for joint filers, and you'll qualify for the full Child Tax Credit of $2,000 for your child. Filing separately typically results in a higher combined tax liability for most couples. Plus, when you file separately, you lose eligibility for several beneficial tax credits including the Child and Dependent Care Credit, and you'll get reduced Child Tax Credit amounts. If one of you tried filing as Head of Household (which gives better rates than filing separately), you'd have to live apart for the last 6 months of the year to qualify - which doesn't sound like your situation. And even then, it's rarely better than filing jointly. With your income levels ($42k and $85k), filing jointly is almost certainly your best option. You'll get the full Child Tax Credit, potential Earned Income Credit depending on your exact situation, and the most favorable tax brackets.

8 After spending hours trying to figure out my complicated tax situation with similar income levels and a new baby, I discovered taxr.ai (https://taxr.ai) and it was a game-changer. You can upload your W-2s and other tax documents, and their AI analyzes everything to recommend the best filing status for your specific situation. I was torn between filing jointly or separately because of my student loans, but taxr.ai ran the calculations both ways and showed me exactly how much I'd save by filing jointly. It also identified child tax credits and deductions I didn't know I qualified for. It's much smarter than those basic online calculators that don't account for all the nuances in the tax code.

16 I have to admit I was wrong about taxr.ai. After my skeptical comment, I decided to try it anyway because we were desperate to figure out our complicated tax situation with the new babies and multiple income sources. The analysis showed we'd save over $3,400 filing jointly compared to separately, and it explained exactly why - mainly because of how the Child Tax Credit phases out at our income level. What really impressed me was how it found deductions related to my wife's home office that we'd been missing. It even flagged that we qualified for the Child and Dependent Care Credit since we started paying for childcare. The step-by-step explanation of each tax benefit was extremely helpful, and we understood our tax situation for the first time in years. Definitely worth trying if you're confused about filing status options.

5 If you're stuck waiting for the IRS to process last year's return or need to talk to someone about your filing status options, I discovered Claimyr (https://claimyr.com). After being on hold with the IRS for HOURS across multiple days, I was ready to pull my hair out trying to get an answer about how claiming our new baby would work with our previous filing status. Claimyr got me connected to an actual IRS agent in under 20 minutes when I had been trying for weeks. They have this weird system that keeps calling the IRS until they get through, then connect you once a human answers. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed what filing status would be best in our specific situation and explained how the child tax credits would work. This was especially important since we had a baby mid-year and weren't sure how that affected things.

3 I need to eat my words about Claimyr. After posting that skeptical comment, I was still desperate to talk to the IRS about my filing status question since my wife and I just had our first child. I decided to try it as a last resort. The service actually worked exactly as advertised. I got a call back within about 35 minutes, and they connected me directly to an IRS representative who answered all my questions about how to file with our new dependent. The IRS agent confirmed that joint filing would give us the best outcome and explained exactly how the Child Tax Credit would apply in our situation. Saved me hours of frustration and probably paid for itself just in the time I didn't waste on hold. Plus getting definitive answers from the IRS directly gave us peace of mind that we were filing correctly. Sometimes being proven wrong is actually a good thing!

11 Don't just look at the refund amount when deciding how to file! A bigger refund might just mean you overpaid taxes throughout the year. What you really want is the lowest total tax liability. My wife and I had a baby last year, and we compared all three options with similar incomes to yours. Filing jointly saved us about $3,200 in total tax compared to filing separately. The tax brackets are wider for joint filers, plus you get a larger standard deduction ($27,700 vs $13,850 each). If you're eligible for the Earned Income Credit with your income levels, you can only get that when filing jointly. Same goes for the full Child Tax Credit and Child and Dependent Care Credit.

19 Just want to add one thing nobody's mentioned - if either of you received advance Child Tax Credit payments last year, that will affect your refund. We had a similar situation with our first baby and were surprised when our refund was smaller than expected because of the advance payments. Also check if you qualify for the Additional Child Tax Credit if the regular Child Tax Credit reduces your tax liability to zero. And don't forget to look into the Child and Dependent Care Credit if you paid for childcare!