You should obtain a Social Security number for your newborn within the first three months after birth. You do need your children's Social Security cards to claim them as dependents on your income tax returns. Understand why and how your dependents' Social Security numbers are used so that you understand the necessity of having the card before tax time comes around.
Consider Also: Claiming Dependents for Your Taxes
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A Social Security card is a document that features a unique number to prove citizenship to government agencies. When you apply for a passport, you will need your Social Security card, when you get married you'll need your Social Security card, and every year when you file taxes, you'll need to enter your Social Security number on your forms. You even need your Social Security number to apply for college and file the FAFSA form with the government.
The 529 College Fund
For children, a Social Security card will also be needed to open a 529 College Fund in their name. This type of plan offers tax protection of funds for the child for future educational purposes. You cannot open a 529 College Fund without the child's Social Security card. Be sure to have their number ready and card as documentation when you apply to open the account.
Dependents for Federal Income Tax
Before you can claim your child as a dependent on your federal tax return, you must have his Social Security number – this number is requested on the federal tax Form 1040. The Social Security number is how the IRS makes sure that you have a child to claim and that no one else is claiming the same child.
Consider Also: Form 1040: What You Need to Know
Dependents for State Income Tax
If you claim a child with a Social Security number on your federal income tax return, you can claim that child on the state return. Some states also request the Social Security number on the state return form, and others go by the information you entered on your federal return.
Tax Credits and Deductions
If you are claiming the Child Tax Credit, you must have a Social Security number for the child. The same holds true for the Child Care Credit. Children must have a current Social Security number if you plan to claim these credits. The same is true if you are claiming any college credit.
Child Bank Account
If your child has a bank account, you must give a Social Security number for the child if you use the child's name on the account. The child receives a statement detailing interest earned at the end of the year, as you would if you had an interest-bearing account.
According to the Social Security Administration, it takes about 7-10 days to receive the card, you should apply for the card as soon as you can so that you have the number for tax time and any bank accounts. If the child is born in the last month of the tax year, you should apply for her Social Security Card immediately in case of any delays.
Warning: Delayed Return
If you make any mistakes when applying for your child's Social Security card, it could hold up your tax returns. You must use the same name and birth date for the Social Security card on your federal tax returns. Any variations of the name and birth date will cause the IRS to reject your tax return.