Posted on: 26 July 2021Share
Are you planning — or already completing — the adoption of a child? With so much changing in your life, it's good to know who you can call on to help you navigate this big adjustment. One of those individuals should be a certified public accountant. Why? Here are five valuable things they will help you understand.
1. Income Tax Changes. If this is your first child, you may not be aware of how the child- and family-related income tax credits and limitations work. Your accountant will work with you to see the impact on future taxes due to the Child Tax Credit (including any advance payments), Earned Income Credit, and child care credits. They can also help you see if and how much you qualify for the Adoption Tax Credit.
2. Education Savings. If you want to get a head start on college costs for your little one, now is the time to learn about options. A CPA can guide you through college savings options, how financial aid works and how being a parent fits into it, and how to carefully use student loans. If you are adopting an older child, you may not have much time before college is an issue, so get trained financial help now.
3. Family Budgeting. Can your monthly finances support this addition to your family? Many new parents — particularly if the adoption was due to an emergency — aren't prepared for this big change in their expenses (and possibly in their income). An accountant is an impartial party who can help you craft a workable budget that provides everything your new family needs and still thinks about the future.
4. Estate Planning. Every adopting parent should go through new estate planning as soon as possible. While much of the work of estate planning is legal, your CPA will help you crunch numbers as well. This may include determining the value of various assets in your estate, figuring out how much to put in trust for an adopted minor of various ages, and understanding the financial implications if you have biological children as well.
5. Retirement Plans. How will the addition of a child change your finances in the future? Will added costs derail your retirement savings? Can you save both for retirement and their college costs? And does being a parent change your goals for retirement, especially if you're an older adopter? Explore these questions with a trained accountant to help you figure out your new retirement path.
Clearly, a certified public accountant can help in many ways as you start your new life with your new addition. Learn more by scheduling your meeting with one today.