It's late on New Year's Eve, and your wife has gone into labor. You're watching Dick Clark on the tiny TV in the hospital, but instead of celebrating, you're wondering when your wife is going to stop shouting expletives at you and just deliver the baby you've been counting on for the last nine months. You're sweating bullets and watching the clock, hoping that the ball gets stuck in Times Square for just a few more minutes so your wife can deliver you newborn on December 31 instead of on January 1.

You're urging on her, quoting Bill Cosby by telling your wife, "Push 'em out... shove 'em out... waaaaaaaay out!" Of course, that's not helping any, but you continue to root her on. Finally, the moment happens when your son or daughter is born, and you realize that the clock says 12:06 a.m. on January 1st.

Congrats. You have a New Year's baby! Of course, to you that doesn't matter, because you're just crying over the fact that you've lost a $3,700 tax break that comes with having another dependent in the year that just ended... Or did you?

This is one of the screwy tax laws on the books that makes no sense whatsoever and will never have a justification. However, because your baby was born on January 1st, you are entitled to an extra personal exemption on your tax return in the prior year, as if you had the child for the entire year before it. January 2nd, you're out of luck. January 1st, and you've got yourself a new dependent.

If your baby is born on January 1, 2012, you are also going to be entitled to a Child Tax Credit on your 2011 tax return as well. Your new child will be worth up to $1,000 straight off of your tax liability. The credit can't be refunded if you have no tax, but it can bring you down to no tax liability. Congress is working on potentially making this tax credit refundable for individuals who have below a certain level of income, but as of the middle of December, no such law had been passed. This law has also been passed for 2012 as well, just in case any of you out there are already planning New Year's 2013 babies.

So as you're sitting there in the delivery room on New Year's Eve, know that your wife doesn't have to drop before the ball does to ring in the new year, because you are still getting all of your tax deductions that you have coming to you.

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(Image via Flickr)