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How Some Life Changes Can Mean Tax Savings
If you’ve recently experienced a big change in your life, such as getting married, buying your first home or having your first baby, you might not know that it can have a positive impact upon your taxes. While you might be caught up in the newness of your situation (and nobody could blame you for that!), your taxes might be furthest from your mind, but it’s important to know that recent life changes could save you money when it comes to tax time.
Here are 3 of the most common life changing events that many individuals experience at least once, along with how they might prove fruitful when it comes to filing your taxes:
Once you’re married, you and your new partner can file your taxes jointly, and there is every chance that you may see lower tax liability than when you were single. Often referred to as a ‘marriage bonus’, federal tax rates are lower for couples who file jointly, compared to those rates applicable for single filers, and bigger tax deductions and credits may also be applicable for married couples.
Stepping onto the property ladder:
While buying a new home is often a huge financial outgoing for many, it can get you some of the largest tax savings, too. Not only can you deduct your home mortgage interest and property taxes, but you can also deduct the points that you paid to secure the loan.
Adding a new member to your family:
Having a baby can mean that you’re eligible for new tax deductions and credits, such as the child tax credit and childcare credit. So, while there are many costs associated with adding a new member to your family, the tax savings that you may be entitled to, could help you manage your finances better.
Depending upon the type of life change you’ve recently experienced, your emotions may be all over the place, and taxes could easily be the last thing on your mind. However, while this is understandable, it’s important to think carefully about whether you can make any savings on your taxes due to your new personal circumstances. If you’re unsure whether you might qualify for tax savings, or simply want to discuss what the IRS need to know about a recent life changing event, reach out to an experienced tax professional who can help guide you through any new processes that might apply to you, and advise you as to any relevant tax savings.