Here is a tax specific question coming from John. John lives in the U.S., and he says, “My wife is due in mid January, which will be full term. But due to the fact that it is twins we’re expecting the twins to come early January, maybe even in late December.”
So a question about taking tax credits and those deductions early. He says, “I was wondering if you had come across this issue. New Year is so close as it relates to tax credits. What approach was taken?”
“I assume we can just wait until 2013 in taking advantage of the credits, but, of course, juggling taxes is kind of tricky, particularly with the timing of when the twins are going to be due, since they’re due at the very beginning of the next year, it becomes a tricky situation.”
Adjusting Your Withholdings for Twins
If you typically do get a refund every year, you might consider adjusting your withholdings at the beginning of December. That way, even if your twins arrive in January you likely don’t owe money because your new withholdings will offset your refund that you would have received next year.
Of course, the advantage of taking your deductions at the end of this year would be that you could really start to have that cash flow on hand to help stock up for your twins’ arrival and the supplies that you’ll need there.
If you’re worried that you may be owing taxes, and you want to change your withholding in 2012, this year, and have babies arriving next year then you can just wait until Jan. 1 and update your withholdings. If your twins come in 2012 instead, if they do come early, you can just file your taxes as soon as possible in 2013 to get your refund because you’ll have those deductions and those child tax credits.
In this case, where you wait until next year to do your tax withholdings, you’ll get then a tax refund and some cash flow on a month-to-month basis. So if you’re getting the extra cash before the twins arrive, you can use it for preparations. If you get the cash after the twins arrive, you can use it for all the related expenses that they incur, as well, from formula to diapers to supplies and medical expenses.
So either way, the money will come in handy in this year or next. You just have to evaluate your situation.
Of course, I’m not a tax accountant, and so you will need to consult with your accountant to confirm what you’re going to do before you do it.
This question was originally addressed on the Dad’s Guide to Twins Podcast episode 18: Twin Taxes, Car Seats in Small Cars, Mo/Mo Twins.
(NOTE: Still expecting your twins? Get weekly updates on your twin pregnancy here.)
Picture by Russell Harrison Photography