Life is full of changes, in fact change is the only constant\nin life. People can experience their life-changing drastically over just one\nyear, maybe joyously, challengingly or painfully. Whether new beginnings or\ndivorce, the addition of a new member in the family or death, everything has\nits tax implications.<\/p>\n\n\n\n
Any event not only changes lives but has a major effect on your tax consequences as well. While calculating the income tax for the year, the tax calculator can assist in the determination of the tax breaks that are qualified owing to the event that took place in the Tax Year.<\/p>\n\n\n\n
Here are some of the life-changing events along with their\ntax implications:<\/p>\n\n\n\n
Getting hitched <\/strong><\/p>\n\n\n\n Tax situations alter dramatically after tying the knot as it\nchanges the filing status. There are two options under which return can be\nfiled: married filing jointly and married filing separately. Couples with\ndifferent salaries might benefit from filing the return jointly. The spouse\nwith lower income can pull the other into a lower tax bracket thus minimizing\nthe taxes. Moreover, those who file their tax return jointly get increased\nstandard deductions, higher limits for charitable contribution and the spouse\nwith no job or income can have their IRAs. <\/p>\n\n\n\n However, filing your return separately can benefit in some\nspecial situations. For example, if one of the spouses owes back taxes, then\nthe refund amount can go to that person\u2019s account of filing jointly. <\/p>\n\n\n\n Having a baby<\/strong><\/p>\n\n\n\n Along with bringing the joys of parenthood, a baby known as\n\u2018a little deduction\u2019 brings great deduction in the taxes. However, after the\nTax Cuts and Jobs Act, 2017 overhauled the US tax code, personal and dependent\nexemptions were eliminated. <\/p>\n\n\n\n Although standard deductions were raised to $12000 for single\nfilers and $24,000 for married couples filing jointly. Further, the child tax\ncredit has also been expanded under the tax reform and other valuable tax\ncredits for the baby like Earned Income Tax Credit, and the Child and Dependent\nCare Credit also existed. The provisions to claim these deductions and credits\nare that the parents must claim their child as a dependent on the tax return\nand the child must be a U.S. citizen, U.S. national or resident alien.<\/p>\n\n\n\n Sending Teenagers to College<\/strong><\/p>\n\n\n\n The cost associated with education can pay dividends in terms\nof tax benefits. The American Opportunity Credit offered by the IRS gives\ncredit to the parents up to $2,500 per year of each dependent child. The\nLifetime Learning Credit is worth up to $2000. <\/p>\n\n\n\n Moreover, the student loan is also deductible up to $2,500 of\nthe interest on the taxes as long as the parents do not claim the student as a\ndependent on their tax return. The students can also get a deduction up to\n$4000 for the qualified educational expense using the tuition and fees\ndeduction. <\/p>\n\n\n\n Getting divorced<\/strong><\/p>\n\n\n\n Divorce is already difficult enough and if the separation took place this year then, a different tax situation can add to this pain, particularly with new tax reform. You may have to file the tax return on you own for the first time. A great tax estimator is freely available on the internet: the tax calculator<\/strong><\/a>, which can bring a little relief for the difficult transitions of life. <\/p>\n\n\n\n Alimony is the major change in the new tax reform regarding\ndivorce. It is non-tax-deductible for the payer and non-taxable for the\nrecipient if the divorce or separation agreement was<\/p>\n\n\n\n It is a very good idea for the recipients of alimony checks\nwho are not taxed while having the support. However, not-so-good for the taxpayer\nwho does not get deductions on their taxes. Also, the benefits of filing\njointly as a married couple goes away with the marriage and higher taxes may be\npaid by both partners after the divorce. <\/p>\n\n\n\n Death <\/strong><\/p>\n\n\n\n Losing a loved one is quite painful and having to pay the\n\u201cdeath tax\u201d adds insult to the sufferings. In the year of death, the personal\nrepresentative of the deceased will have to file a final tax return in his\/her\nname. In the case death of a spouse, an option of filing a joint return for the\nyear can be selected. After that, the taxpayer can file as qualifying widow (er)\nfor two years after the death. This status allows higher standard deduction\neasing financial burden caused due to the demise of the spouse. <\/p>\n\n\n\n Now, with the new tax reform, the estate tax is not an issue\nfor most people. Under new tax law, the estate can be up to $11,400,000 before\nthere is any need to pay the taxes by the heirs on behalf\nof the deceased. <\/p>\n\n\n\n Conclusion<\/strong><\/p>\n\n\n\n Life is the biggest roller coaster ride, and these are\nbreakthrough events that are part of life. Like change, taxes in the USA are\nalso inevitable and by being aware of the tax ramifications beforehand, tax season\ncan be made be less complicated and stressful.<\/p>\n","protected":false},"excerpt":{"rendered":" Life is full of changes, in fact change is the only constant in life. People can experience their life-changing drastically over just one year, maybe joyously, challengingly or painfully. Whether new beginnings or divorce, the addition of a new member in the family or death, everything has its tax implications. Any event not only changes… Continue reading Every Moment That Changes Life, Changes Your Taxes Too<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"_links":{"self":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/438"}],"collection":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/comments?post=438"}],"version-history":[{"count":1,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/438\/revisions"}],"predecessor-version":[{"id":446,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/438\/revisions\/446"}],"wp:attachment":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/media?parent=438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/categories?post=438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/tags?post=438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}