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.”
He has 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 the new year 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.
Remember that there are new tax law changes that typically come into effect every year. These changes are at the whim of our current President and Congress so stay up-to-date on the latest tax legislation if you’re going to change your deductions due to twins.
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.
If you want to change your withholding this year but are worried that you’ll owe taxes because you think the babies will be arriving next year, then you can just wait until January 1st and update your withholdings then.
If your twins come this year instead (meaning they arrived early), you can just file your taxes as soon as possible in the new year to get your refund. At that point, you’ll know for sure that have those deductions and child tax credits coming your way.
When you wait until next year to do your tax withholdings, you’ll get a tax refund and some cash flow on a month-to-month basis. 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, 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.
(RELATED: Don't reinvent the twin parenting wheel. Get my 7 Things Every Dad of Twins Needs to Know.)
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.
Picture by Russell Harrison Photography