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Throughout the stages of life, many significant events can cause major financial tax changes. In addition to affecting your bank accounts, some life events can significantly impact your taxes. Knowing this impact before, during, and after the event can help minimize confusion around filing your taxes in Denver.
Marriage
Several factors may impact your tax bill if you’re planning to get hitched. You’ll need to consider whether you plan to file jointly or separately and what kind of benefits you might qualify for. If you’re filing jointly, you’ll also need to determine whether you’ll claim any dependents and, if so, how many. Finally, you’ll need to assess your income level before deciding whether to file as single or head of household.
Education
School can be expensive, especially if you go to college. But there are ways to get financial aid and reduce those costs. You may qualify for federal grants and loans, and state programs may offer scholarships. There are also tax breaks available to students. For example, you can deduct up $2,500 of tuition and fees from your income when filing your taxes. And if you’re still paying off student loans, you can deduct the interest paid on them.
In addition to tax benefits, there are other perks to obtaining professional certifications. For example, the American Society of Mechanical Engineers (ASME) offers a $1,000 stipend for those pursuing certification through its ASME Certification Program. The National Institute of Standards and Technology (NIST) provides a $2,500 grant for those seeking NIST certification. The American Board of Medical Specialties (ABMS) offers a $5,000 stipend for pursuing ABMS certification. And the National Association of Realtors (NAR) offers a $10,000 grant for real estate agents pursuing NAR certification.
Having a Child
A baby can help you save money. You can claim several tax credits when you have a baby, including a child tax credit and a dependent care credit. These credits will lower your taxable income and make you pay fewer taxes. A baby can also give you access to other benefits like the EITC.
A Job Promotion or Change
A work raise is an increase in salary that comes with a corresponding tax decrease. If you get a raise at work, you could pay higher taxes if you’re already in a high-income bracket. You should check the IRS withholding calculator to see your current rate after getting a raise. Then, you can update your W-4 form to reflect your new number.
Purchasing or Selling a Home
If you buy a home, you can deduct all kinds of expenses when selling it. If you file jointly, you can also get tax breaks on up to $500k in capital gains.
Becoming a Widow or Widower
If you die in 2022, your representative will need to file a final tax report in your name, just like if you were still alive. If you have a surviving spouse, then your spouse can file a joint tax return for that year. Depending on the size of your assets, an inheritance tax return may also need filing. After the estate assets are distributed, it becomes the responsibility of your beneficiaries to file their tax reports that include any inherited assets.
At McGuire Law Firm, we aim to provide the best experience possible when you file your taxes. That means asking you enough questions to start and then helping you complete your return.
Gaining an inheritance
Inherited funds are not subject to taxes when distributed to beneficiaries. However, if you inherit real estate, you may owe capital gains tax on any appreciation in its value since the decedent’s death. You also may need to pay additional taxes on any increase in the cost basis of the inherited property.
McGuire Law Firm provides IRS representation and tax law services. Contact us today for your legal tax needs and to speak with a Denver tax attorney or Denver business attorney.
