Major life changes can be intimidating in a lot of ways. Here are few life events that may change how you file taxes, how much money you have withheld from paychecks, and how much money you can expect to receive in your refund.
When you get married, you’ll need to change your tax filing status from single or head of household to married filing jointly or married filing separately. You may want to adjust the amount of taxes withheld from your paycheck by filling out a new W-4 with your employer.
Divorce also affects your tax situation. You may qualify for innocent spouse relief if your ex owes back taxes or has a lien on your joint tax refund. In many cases, divorcing parties decide ahead of time who will claim any dependents after the divorce is final.
If you have questions about your specific situation, it’s best to consult a tax professional. They can help you avoid common mistakes when filing after divorce and help you understand how to maximize your tax return while minimizing the amount of taxes you pay going forward.
If you, your spouse, or dependents are attending college, there are a variety of tax breaks available. Education tax credits in the form of American Opportunity and Lifetime Learning Credits are just one way to access the tax advantages of taking college classes.
You may also be eligible for student tax deductions including student loan interest payments. In some cases, tuition payments are tax deductible.
Having children means that you may be able to claim the Child Tax Credit, a larger Earned Income Credit, and it gives you access to federal tax credits for families. Adding dependents reduces the amount of taxes you pay by increasing your deductions.
For tax filing year 2017 the child tax credit gives you $1,000 per year for each qualifying child. If your children are under the age of 13 and require childcare services, those expenses are also deductible up to a point.
When you purchase a home, you’ll have a long list of tax-deductible items that aren’t available to renters. The newest set of tax law changes preserved the mortgage interest deduction, and that’s the tax break that most homeowners claim. If you work from home and you decide to itemize your deductions, you can claim a certain amount for your office space. Energy efficient homes are eligible for a special set of tax breaks.
Other tax-deductible expenses related to home ownership include real estate taxes and mortgage points paid when you finance a home.
Minimizing your tax burden and maximizing your tax return can be time consuming. If you’ve had a major life change in the past year, it’s wise to seek the advice of a tax professional. Some tax preparation experts even offer services like low-cost tax refund loans and free quotes.