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From marriage to the birth of a child, life is full of amazing milestones. The changes could also affect how you file tax returns. If you’ve experienced any of the following life alterations over the past year, tax accounting specialists recommend seeking professional guidance before the upcoming filing season.

4 Life Milestones That Modify Income Tax Returns

1. Getting Married

Matrimony is one of life’s most celebrated events. It’s also the time for the new spouses to decide whether to file jointly or separately. Tax accounting specialists say there’s no cut and dried answer because each couple’s tax circumstances are unique. One of the key factors that may influence the decision is the employee paycheck withholding amounts. Living in a community property state where taxes are assessed could also be a factor.

2. Getting Divorced

On the flip side, a divorce brings on new tax changes such as who will claim the children as dependents. The divorce decree can offer guidance with this matter. If one partner is named the custodial parent, only they are permitted to use the dependent claim. The timing of a divorce or separation is also a consideration. If either is in the process but the decree has not been filed by December 31 before the upcoming tax season, the couple can only file as married filing jointly or married filing separately. Filing as single or head of household is allowed if the divorce is finalized by December 31.

3. Having a Baby

tax accountingWhen it’s time to file income tax returns, parents can claim their new babies as dependents. This major change could potentially lower any taxes due or boost a refund. Adding dependents also means parents may be eligible for certain tax credits for expenses such as childcare. For kids heading off to college, there are other educational tax credits available to offset any out-of-pocket contributions.

4. Buying or Selling Property

If you just bought a house, you could be eligible for several tax deductions. Property taxes and mortgage loan interest are two of the most common ones. Homeowners can also make deductions for private mortgage insurance and points paid on their home loan. If you sold a house or other real estate property, the income gain may be tax-free. Married couples are eligible if the gain is up to $500,000 and up to $250,000 for single sellers. Because property sales and purchases can be complex, an experienced tax accounting specialist can identify all eligible deductions.

 

If you’ve recently experienced any major life changes, Linda M. Shiraiwa, CPA, PS Inc., in Gig Harbor, WA, is your trusted tax accounting advisor. She specializes in helping individuals and business owners prepare their income tax returns with impeccable attention to detail. Because Linda understands that no two financial circumstances are alike, her personalized approach is what keeps clients coming back each year. Call (253) 858-6030 today with all your questions about life and tax changes. Visit the website for information on the complete suite of services.

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