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Are you going to be a rich dad or poor dad? Well, the reality is that having a baby is not cheap. It's not like buying a fifty-cent goldfish that is more than happy to swim by the same castle in the same round fishbowl day after day. Indeed, having a baby is a lifetime commitment both emotionally and financially. In the United States, it is estimated that the cost of raising a baby to a ripe age of eighteen is anywhere between $125,000 and $250,000. In the first year alone, your little tot can cost as much as $11,000 to feed, diaper and outfit (including crib, toys, bath, etc.), plus $3,000 to $5000 in babysitting costs. Some couples save on childcare expenses by having one parent stay at home for a year or two. But this isn't a viable option for most couples since the forgone income generated by a second salary exceeds the financial savings for childcare.
While the costs of raising a kid may seem daunting, the good news is that many governments offer tax credits to help ease the fiscal burden of raising a child. Here is a rudimentary overview of the tax benefits the Internal Revenue Service (IRS) makes available to citizens of the United States. For more information on your individual tax situation, visit the IRS website or speak with your accountant.
Expanded Child Tax Credit
For your 2005 tax return you may be eligible to claim a maximum of $1000 in child tax credit for every child you have, provided that he/she is in your custody, is under the age of 17 and is a U.S. citizen. However, this credit begins to phase out as your gross individual and/or family income increases.
The amount at which this phase-out begins depends on your filing status:
$110,000 if you are married and filing jointly
$55,000 if you are married and filing separately
$75,000 if you are the head of household/single/qualifying widow(er)
Child and Dependent Care Credit
Another way to reduce the amount of U.S. tax you owe is to claim the child and dependent care credit. You are eligible for this deduction if you paid someone to care for your child so that you could either work or look for work. The catch is that your child must be under the age of 13 and the child-care provider must have a valid tax ID number or employer ID number (i.e., legal to work in the United States).
In the United States, you can also claim this credit if you paid for someone to care for a dependent of any age, including your spouse, who is physically or mentally incapable of taking care of him/herself. Depending on your income, the credit can range from 20-35% of eligible child-care expenses.
Earned Income Tax Credit
In the United States, this credit is primarily for low-income working individuals and families. It is intended to reduce the amount of federal taxes you owe and, in some cases, even provide a tax refund. To qualify, your individual income must be under $30,338 (or under $31,330 if married and filing jointly) and have one child under 17. The income limit increases to $34,458 (or $35,458 if married and filing jointly) if you have more than one child under seventeen.
Here are some other pregnancy and parenting resources on The Funky Stork that you will find useful:
Thefunkystork.com is a pregnancy resource and parenting guide for expectant fathers and new dads. It provides only general information designed for educational purposes, and does not offer pregnancy or pediatric advice. You should always consult a physician about concerns you have with your pregnancy or your child's health.
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PREGNANCY 101 
