Whether you are getting married, having a baby, or going to college, several of your life events have consequences for your taxes. What happens in your life affects your taxes significantly. Your taxes never remain the same, and events in your life as well as changes in legislative laws, cause either an increase or decrease in your taxes.
If you have recently gone through a big change in your life and are wondering whether it reflects on your taxes, you can consult a professional Phoenix tax planning expert. A professional is aware of the laws or any recent changes in them. Doing everything on your own can seem great for your budget, but it is important to keep the implications in mind.
Common life events that affect your taxes
- Going to college.
Starting college is a big change in every person’s life. The IRS offers the American Opportunity Credit for college-going students and their parents. However, it is noteworthy that the student must be enrolled in a course for at least half-time in the first four years of college. You may also be able to deduct the student loan interest as long as the student is not a dependent.
- Getting married.
Indeed, getting married to someone, taking someone’s last name, and promising someone to spend the rest of your life with them is a big deal and a big change. When you get married, you can file your taxes together, meaning you get to pay a lower amount of taxes and get even more deductions than you would if you filed separately. However, there are also certain situations where getting married can increase your taxes. Speak to an expert to know more.
- Having or adopting a child.
Having a baby is a big change in your life. A baby not only increases the number of family members but also has tax implications. One of the important things to remember when you welcome a child into your family is their Social Security number. Doing this will enable you to claim your child while filing your next tax return and allow you to take advantage of deductions for childcare expenses.
- Buying or selling a home.
When you buy a home, there are several deductions you can take advantage of. These include the following:
- paid points
- your mortgage interest
- any real estate taxes
If you are considering selling your house, you can save up to $500,000 in gains when you file jointly with your spouse.
