I’m a CPA: 7 Tax Deductions New Parents Often Miss
New parents often can’t find the time to sleep, let alone get into the nitty-gritty of possible tax deductions. Making the physical, emotional and financial transition into parenthood is challenging enough without adding more balls to juggle.
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Yet missing out on key tax deductions and credits could mean leaving hundreds — if not thousands — of dollars on the table.
If there’s one thing a new parent needs, it’s all the extra money they can get. To help overwhelmed parents understand what they may be overlooking, MoneyLion spoke with Daniel Roccanti, a CPA at James Moore & Co., for his take on the tax deductions and credits they commonly miss.
“What often gets overlooked are the tax opportunities that come with this new chapter,” he said. “The tax code offers meaningful benefits for families, but many of them require proactive planning to fully capture.”
1. Child and Dependent Care Credit
Are you paying for daycare so you can go back to the office or school? Roccanti wants you to know about the Child and Dependent Care Credit. It’s a nonrefundable tax credit for working families who pay for the care of dependents under age 13, or for the care of disabled spouses and dependents, so they can work or look for work.
This sounds like a huge help, so why is it so commonly overlooked?
“Many parents assume it’s limited or not worth the effort — but it can provide meaningful relief depending on income and expenses,” he said.
2. Dependent Care FSA Contributions
Roccanti adds that if your employer offers a dependent care flexible spending account, you can set aside pretax dollars for child care expenses.
“The key is coordinating this with the Child and Dependent Care Credit,” he said. “You can’t double-dip, so strategy matters.”
Having a smart strategy is key to successfully filing your taxes at any stage of life, but it’s especially important during major life changes like new parenthood. That’s why working with a tax preparer you trust can feel like another part of the family.
3. Medical Expense Deductions
New parents are often just as familiar with doctors’ offices as they are with playgrounds. Between childbirth costs, pediatric care and insurance premiums, medical expenses can add up quickly.
“If your total medical expenses exceed the IRS threshold, you may be able to itemize and deduct a portion — something many families don’t revisit after the year ends,” Roccanti said.
This deduction covers unreimbursed, qualified medical expenses that exceed 7.5% of your adjusted gross income for the year, as long as you itemize deductions on IRS Schedule A (Form 1040).
4. Child Tax Credit (Expanded Under the One Big Beautiful Bill Act)
For Roccanti, changes to the Child Tax Credit under the One Big Beautiful Bill Act are among the most beneficial developments for new families this tax season. Yet, busy as they are, parents might not be following the latest legislative updates.
“With the recent increase to $2,200 per qualifying child and inflation adjustments, this is one of the most valuable benefits available,” he said. “But eligibility and phaseouts still apply, so timing income and understanding thresholds is critical.”
5. Earned Income Tax Credit (EITC)
Additionally, Roccanti says many parents don’t realize that having a new child can significantly increase their eligibility for the Earned Income Tax Credit.
“Even moderate-income households should revisit this annually, as qualifications can shift year to year,” he said.
6. Education Savings Contributions
While Roccanti notes that 529 plan contributions aren’t federally deductible, some states offer tax benefits. Working with a tax preparer can help you determine how a potential deduction might work where you live.
“More importantly, early contributions can support long-term planning — especially when paired with gifting strategies from family members,” he said.
7. Filing Status Optimization
When you become a parent, you may be able to file as head of household, which Roccanti says offers a higher standard deduction and more favorable tax brackets. However, he adds, this is often missed or incorrectly applied.
The Bottom Line
As a CPA, Roccanti says he consistently sees new parents focus only on filing their taxes, not planning them. He understands they’re stressed and busy, but he’s direct: Having a plan in place will benefit their families.
“With recent changes like the expanded standard deduction and Child Tax Credit, the opportunity for savings is real, but only if you’re looking at the full picture,” he said. “The earlier you align your income, credits and deductions, the more you can benefit — not just this year, but long term.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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