Life Changing Events (that might change your taxes)
Sometimes, there are events in your life that may affect your income taxes. Here are some examples that may require a review of your taxes before the end of the year:
A raise or promotion. This should feel great to know your hard work pays off. But consider that you may pay a higher tax bill if you are nudged into a new income tax bracket.
A relationship change. A marriage or divorce will change your filing status. Even if this happens in December, it applies for the whole year.
A home change. Purchasing and owning a home provides you with new deductions and credits, including mortgage interest, home equity loan interest, real estate taxes and energy efficient tax credits. It also brings in the often used capital gain tax exclusion (when you sell your home).
A birth. Having a baby means you may be able to take advantage of credits like the child tax credit, family credit, dependent care credit or earned income tax credit.
A death. While inheritance is often tax-free, there are exceptions. They include IRAs (distributions of which may be taxed) as well as understanding the tax impact of inherited property.
If you want more information about how a big life event can change your income tax obligations, Elias Strauss CPAs is happy to help.