The Cost of Bringing Up Baby
Do Your Paperwork
After your baby's birth certificate, the most important document you'll need is Form SS-5 from the Social Security Administration. Most hospitals give out cards you can send in to request the form. This form allows you to apply for a Social Security number for your newborn. That in turn lets you claim a tax deduction worth $2,700 in 1998. For the first time this year, parents who jointly earn $110,000 or less ($75,000 for single heads of household) will also qualify for a new maximum $400 tax credit (rising to $500 next year) for children under age 17. Unlike a deduction, a credit is deducted directly from the taxes you owe, rather than your taxable income.
To ensure that your baby's health-care costs will be covered by your insurer, you'll need to officially enroll her in your medical plan within 30 days of the birth. And while you're filling out forms, take time to review the beneficiary designations on your retirement plans and life-insurance policies, advises Chicago financial planner Hope Feinglass. "Chances are you've named your spouse as your rightful heir, and you'll probably want to keep it that way," she says. "But if you've named parents, siblings, or best friends as your secondary beneficiaries, you might want to replace them with your newest family member."