When your baby is born, he/she will bring you more love and devotion than you ever thought possible — but did you know that your little bundle of joy may also bring you a tax credit? Thanks to the Working for Families program, you can get a parental tax credit that covers the first eight weeks after your baby is born. It’s designed to help you out with some of the expenses associated with having a brand new baby.
How much can you get? Your exact parental tax credit will depend on how high your family’s income is, how many children you already have, how old they are, and whether or not you’ve had any other babies this year. If you qualify for the full amount, you can get $150 each week for the first eight weeks, or a $1,200 lump sum payment. If you want the installment payments, you’ll have to apply for your parental tax credit right after your baby is born. And, yes, you’ll have to wait for him/her to be born first. That’s because you’ll need to include his/her IRD number on the form. If you wait more than three months to apply, you’ll automatically get the lump sum payment at the end of the year.
How do you know if you qualify? If you’re already registered in the Working for Families program, then you qualify for the parental tax credit. If you’re not in the program yet, a quick phone call can tell you if you’re eligible. Don’t assume that you don’t qualify just because you’re not the one who gave birth or because the baby hasn’t gone home yet. This parental tax credit applies to adoptions, too. And, if your baby is in the neo-natal unit, you still qualify. Just remember — there are a couple of exceptions to this parental tax credit. The biggest is paid parental leave. If you’re on it, you can’t get this tax credit. You’ll have your choice between one or the other. However, unless you’ve got a really low-paying job, your paid parental leave will pay more than this tax credit does. The only other time you may get a better deal on a parental tax credit is if you have twins. Your paid parental leave will pay you the same amount, regardless of how many children you have at once. However, you can qualify for double the parental tax credit.
What are some other exceptions? You can’t qualify for a parental tax credit if you get a student allowance, any kind of income-tested benefit, a veteran’s pension, NZ Super, or accident compensation from ACC. But as long as you meet the guidelines, you might as well get some help while you can. After all, new babies can be expensive!
