A common question we get at JFTS is “How much is each child worth?”. We receive this from either current or expecting parents. What an awful question!

We know that parents do not mean “How much can I SELL my child for,” they mean “How much of a tax refund can I get for each child?”

First off, this is a loaded question. The theoretical “value” of each child depends on many factors ranging from your filing status to your income to how many children you have. The biggest child tax credits are: the Earned Income Tax Credit, Child and Dependent Care Credit, Child Tax Credit and Adoption Credit.

Depending on your earned income and tax burden, these credits can be huge, to the tune of clients we have worked with who earned $15k/yr, had little to no tax with-held and still received a $5k+ refund. Some of these clients yell “JACKPOT!” as they are unlike most refunds where a client receives a check for the amount of taxes they overpaid the previous year, these clients are literally getting money back without paying in.

The question here is – “What is the cost of a child?” Recent studies have shown that raising a child from birth to age 18 in the US can cost anywhere from $200k-250k. This breaks down to a anywhere from $16,667/yr to $20,833/yr. Even if you are one of our “JACKPOT” cases, this cost far outweighs the tax benefits.

With this article we are not discouraging having children. It is only an eye-opener that having a child for the purposes of tax benefits is an awful “financial plan” and should be avoided. Have a child because you want to love and care for that child, not for a yearly paycheck, especially when the costs to raise that child properly far outweigh that paycheck.